While 2020 has been an incredibly challenging year, housing turned out as a bright spot. Despite the impact of the coronavirus pandemic, homeownership rates rose to 67.4% in the third quarter, up from 64.8% the same period in 2019.
The fundamentals are in place for a continued strong housing market in 2021, particularly with expectations that mortgage rates will remain around 3%. Here are a few more of our predictions for the year ahead.
- Home prices will rise. The law of supply and demand will drive prices higher, with 5% to 6% increases predicted on average.
- Affordability will remain mostly positive. Low mortgage rates will offset rising prices, increasing the number of households who can afford to buy a home.
- Inventory challenges will continue. While builders are expected to construct homes at a faster pace in 2021, there’s still a gap between demand and supply for new and existing homes.
- Increased teleworking will influence housing. People will continue to work from home, affecting where they’re shopping for homes and what they’re looking for in those properties.
- Vacation home markets will stay hot. In 2020, homeowners with rising equity and investors with high stock market profits drove a spike in demand for homes in coastal markets, which will continue next year.
- Technology remains critical. Virtual tours, remote closings and video conferencing kept real estate moving in 2020, and virtual buying and selling will continue to lead the way in 2021.
Whether you’re looking to buy, sell or invest in real estate in 2021, we can help. With our partners in mortgage, title, and insurance, our Fonville Morisey family has you covered for all your real estate needs. Happy holidays!