What to Expect from the Housing Market in 2021?
The economy is recovering, and so is the housing market. Worldwide, Real Estate is going through a post-pandemic rebound, which means that people are buying houses like fire.
There has been a rapid growth in real estate prices due to the rising demands of houses. People are looking to purchase (or mortgage) homes as the employment rate lifts up.
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Here's what you can expect from the housing markets in 2021:
1. Purchasing
Let's take a look at the purchasing side. The interest rates of mortgages in 2020 became so low due to the covid-19 pandemic that they broke all previous records. However, at the start of 2021, a new record low was formed for fixed 30-year mortgages when it was reported by Freddie Mac that in early January, the interest rate was 2.65%.
In spring, the interest rates went up. On April 8, it was reported that for a 30-year fixed mortgage, the average interest rate was 3.13%. However, it was still less than the pre-pandemic mortgage interest rate. The demand for houses increased so much in 2020 and the starting of 2021 due to low-interest rates that the mortgages went up again.
Sadly, there aren't enough houses left to sell to buyers. According to an article on realtor.com, the number of houses on the market in March 2020 was 52% higher than the number of houses in March 2021.
According to the rule of demand and supply, when supply is low, prices increase, and this is precisely what is going to happen as 2021 continues. It looks like all the houses are sold, and hence, house prices are likely to increase as house hunters continue to demand houses to avail the low-interest rates.
If you are looking to purchase a house, now is the time because prices are likely to increase soon!
2. Selling
In the latter half of 2020, many homeowners were a contributing factor to the low supply of homes on the market. They were not willing to transfer from a house that has enough space for working remotely or taking online classes.
According to realtor.com, the number of new listings in February 2021 was 25.4% lower than the new listings in February 2020, and that the decrease in the new listings of March 2021 compared to March 2020 is not as steep.
Factors like increasing buyer confidence, production of vaccination for adults, and decreasing unemployment rates help in selling houses feel less risky. George Ratiu, a senior economist, pointed out that during the spring and summer months of 2021, house inventory will grow at a restricted pace.
This is because many house sellers aren't just contributing to the growth of the housing inventory but also to the increasing demand. One reason behind this is that after selling their current house, most sellers buy a new house to live in.
The summer of 2021 will be quite beneficial for sellers, as the prices for homes will increase. The National Association of Realtors stated that the national average home price for existing homes saw a 23.6% increase in May 2021, as compared to May 2020, making it reach $313,000.
If you're looking for the best potential customer with your new house listings for this summer, use the best Real Estate CRM available online. Through the CRM software, you'll be able to have a proper understanding of consumer trends and which location of customers your real estate can target best.
3. Renting
The rental market hasn't been treated well because of the impact that the covid-19 pandemic had on the economy. The shut-down of retail stores, restaurants, and other work-in-places has also deeply affected rental homes. Thus, it has become a growing concern for the occupants that aren't able to pay the rent of such homes.
The U.S Congress has decided to approve more than $46 billion for rental assistance in order to decrease the amount of back rent owed. The coronavirus relief package was passed in the month of December 2020, and in March, the American Rescue Plan Act was passed.
The U. S’s CDC extended its eviction moratorium through June 30, 2021, preventing the expulsion of those tenants facing financial stresses due to the coronavirus. This extension provides more time to state governments to distribute federal rental assistance.
Although there's hope for consistent economic recovery and decreased covid positivity ratios. The CEO of National Low Income Housing Coalition, Diane Yentle, explains that it's vague to say that the extending of eviction moratorium may be possible without huge evictions taking place.
It doesn't mean there's no opportunity for the rental industry to flourish, especially in the summer season. People who aren't opting for big homes are searching for rented apartments in major cities.
Kim Reidy, Director of the relocation of Seattle Rental Group and an active role player of the Pointe3 leadership group, gives a clear picture of an active rental sector. She stated that landlords in Seattle have reported that they receive at most 100 e-mails within a day of listing a single-family home for rent online.
Reidy further said that more than 1000 customers reached out to her, looking forward to rentals in the city center of Seattle by the end of August. This signals an increasing interest in the urban cores of big cities as the summer season progresses.
4. Construction and Development
Shortage of residential houses existed even before the pandemic as the activity of developing residential homes remained low. However, builders are trying their best to constrain the surging demand.
According to the U.S Census Bureau, the authories provided construction permits to around 1.68 million privately owned new housing units in May 2021, which is 34.9% higher than that of May 2020. Though the building activity is predicted to grow during this summer season, the housing inventory is still expected to fall short due to high demands.
The Real Estate Market in 2021
With the COVID-19 pandemic's effects lingering off, the housing market is making a gradual recovery. The prices of houses are expected to rise due to increased mortgages rates and the shortage of houses due to high demand.
This is good news for homeowners who are looking for selling opportunities. The rental market is also expected to see growth with increased requests for rental apartments in urban centers.
Author: Myrah Abrar
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