For American homesellers and those searching to buy their next homes, 2020 was as unpredictable as the COVID-19 Pandemic. But despite fear and uncertainty, some took advantage of unprecedented
Housing Market Predictions For 2021
Dated: January 2 2021
For American homesellers and those searching to buy their next homes, 2020 was as unpredictable as the COVID-19 Pandemic. But despite fear and uncertainty, some took advantage of unprecedented opportunities in the housing market.
First and foremost, was the precipitous fall of interest rates that began in March and continued through the rest of the year. The 30-year fixed mortgage rate dropped to its lowest-ever average of 3.29% on March 5, 2020. Since then, it fell another 15 times to a new all-time low of 2.67% in mid-December. According to Freddie Mac, that marked the first time the average 30-year rate had fallen below 2.7% since the rates were first recorded in 1971.
Record rates caused a flurry of buyers to flood the market and sellers gained the upper hand with multiple offers becoming commonplace at most price points. The problem facing buyers has been super-low inventory, which has caused home prices to rise.
So, the obvious question is: "What's in store for the new year?"
At least in the short-term, it appears interest rates will remain low and flat. That means they are likely to fluctuate between the current record rate and the low-3s. The same can be said for refinancing rates. On New Year's Day, the average refinancing rate for 30-year fixed mortgages was 2.91%. That was down 4 basis points from a rate recorded in the final week of 2020. A month earlier, the average rate was 2.99%.
Homebuyers will need to be creative to beat their competition in 2021. The highest offer typically wins, but when several offers come in over the asking price, there is a point where sellers become weary of their homes appraising at a steeply escalated amount. When it comes to price, buyers should still put their best foot forward, but offers can be constructed to compel sellers to choose lower bids if the sale is scheduled to close sooner and the buyer is willing to limit contingencies or remove them altogether.
The real estate market is predicted to remain a seller's one in the first half of 2021, but buyers should keep a watchful eye on the nation's economy and the worldwide roll-out of COVID vaccines. If vaccinations are successful in the U.S., the economy should rebound with less unemployment, more jobs, and more consumer confidence. A stronger economy could lead to higher interest rates, but the market should balance out with increased inventory. If that balance is achieved, buyers should rejoice because housing prices will inevitably drop, as seller competition heats up.
*Photo Courtesy of BMG
Joe Versage is a former TV sportscaster who uses his competitive nature to win deals in real estate. As founder of the Versage Group, Joe serves residential realty clients in Northern Virginia and ref....
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