“Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand.”
According to the latest CoreLogic Home Price Insights Report, nationwide home values increased by 8.2% over the last twelve months. The dramatic rise was brought about as the inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. As CoreLogic explained:
“Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply.”
Where will home values go in 2021?
Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.
Housing Supply
According to the National Association of Realtors (NAR), the current number of single-family homes for sale is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 with approximately 270,000 fewer homes for sale than there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1. As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2. Some households impacted financially by the pandemic will be forced to sell.
Housing Demand
Low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. Today, we’re starting 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason why demand is expected to remain high throughout the new year.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts:
Bottom Line
There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that home values in the country will continue to appreciate.
To view original article, visit Keeping Current Matters.
Where Are People Moving Today and Why?
If you’re thinking of moving, you may be considering the inventory and affordability challenges in the housing market and how to offset these.
There’s Only Half the Inventory of a Normal Housing Market Today
If you want to list your house, know that there’s only about half the inventory there’d usually be in a more normal year.
Four Ways You Can Use Your Home Equity
Understanding how home equity works, and how to leverage it, is important for any homeowner.
Sellers: Don’t Let These Two Things Hold You Back
If fear you won’t be able to find your next home is the primary thing holding you back, remember to consider all your options.
Pricing Your House Right Still Matters Today
Pricing your house fairly based on market conditions increases the chance you’ll have more buyers who are interested in purchasing it.
Homebuyers Are Still More Active Than Usual
Buyer demand hasn’t disappeared, and in many places remains strong largely due to the shortage of homes on the market.