If you’re hoping to buy or sell a home, you’ll need to know about the market forecast so that you can find the best time. 2020 was an unpredictable year, where many of us began working from home, making a home office and extra space a necessity. Selling or buying a home in 2021 may seem like an unknown. While no one can predict the market with complete accuracy, some signs tell us what to expect this year.
House market forecasts can give you an idea about when to buy or sell, but they should never dictate your final decisions; only your finances and personal situation can.
Let’s take a closer look at the 2021 housing market.
More Homebuyers Will Enter the Market
With 2020 being so unpredictable, many Americans moved out of the cities and into the suburbs for a cheaper lifestyle away from the busy sidewalks. In fact, many found out that renting a house with more square footage and land was cheaper than their studio apartment in the city.
While more home buyers entered the market last year, we can expect this trend to continue as more Americans find their cost of living significantly lower living outside the city, while they also get more land and a larger home for a lower price than their apartments. These homebuyers are educated about the market and looking to the future so that they can begin estate planning to be prepared for anything after an unprecedented, unpredictable year.
There Will Be Fewer Homes Listed for Sale
While there might have been tons of homes for sale in 2020 due to the unpredictable state of the economy and employment, the number of homes listed for sale fell 29.5%, according to CNBC. This means that finding a home in your budget that meets your needs will be increasingly more difficult as current homeowners plan to stay put.
While the shift to a remote workforce may be one factor for why houses are selling like hotcakes, remember that most employees will return to the workplace as soon as it’s safe, so it’s not the only factor. However, this is great news for sellers because they won’t have to compete as much with others to sell their house for their asking price.
Houses Will Sell Quickly
According to the National Association of Realtors ®, before the start of 2021, it took about 21 days for a home to go from being listed to a contract. The year before that, it took 38 days. This is good news for sellers who want to sell their houses fast, but buyers will need to stay focused and snatch up houses when they can. If you wait too long, the house you want to buy will likely be taken.
There Will Be More Foreclosures
Due to the pandemic, unemployment rates were sky-high, and many people failed to make their mortgage payments. Attom Data Solutions projected that at least 225,000 homeowners face eviction because of their missing payments. Because the pandemic hit us where it hurts most, our finances, we can assume that this rate is likely to go up through 2021.
While many employees were given the opportunity to work from home, others were laid off, which means that they had very little income and were forced to look for other opportunities they likely couldn’t find during the pandemic. Many people are still without jobs even though most states have reopened and resumed activities in some way.
More foreclosures for homebuyers can be good news. It’s all a matter of perspective. Buyers might be able to find a great discount on a home they couldn’t have otherwise afforded. It’s important to keep in mind that foreclosed homes may have potential issues, so you must learn about the house before making a rash decision.
Higher Home Prices
While in the world of commercial real estate, many tenants were able to negotiate a rent reduction in 2020, the same was not true for buyers looking to buy a home at a lower cost. With more people moving from the cities to the suburbs, we can expect home prices to go up, which means that most buyers will likely need at least a 20% down payment to get a mortgage. However, there are other programs available through mortgage lenders that may allow buyers to put less money down for a higher interest rate.
With higher home prices and fewer houses on the market, homebuyers will have to do everything they can to make sure they can purchase the home of their dreams.
This is good news for those who plan to sell in 2021, though. With fewer houses on the market to compete with yours, overall higher home prices, and more buyers, you’ll have an easier time selling your house at any reasonable price point.
Will the Housing Market Crash?
Because home prices are increasing, the housing market is unlikely to crash this year. Since new buyers will be entering the market and there’s a high demand with fewer homes available, home prices will continue to go up, preventing the market from crashing.
On the other side of this, if the number of houses for sale increased exponentially and was very high, but there weren’t a large number of buyers willing to purchase them, home prices would drop, which could cause a crash. However, none of this is likely for 2021.
What This Means for Buyers
Because 2021 will be a seller’s market, you’ll be up against heavy competition. If you’re getting a mortgage, you may still qualify for a low-interest rate, which is a silver lining. While rates will increase slightly, you’ll still have a great chance at getting a lower one, especially if you provide a 20% downpayment. The lower your interest rate, the less you’ll pay each month and the less interest you’ll pay over the life of the loan.
What This Means for Sellers
Sellers can walk into 2021 confidently since they have little competition and tons of available buyers. If you work with a real estate agent, you can set the best home price and find the right buyer quickly.
Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. He is currently a contributing editor for 365 Business Tips. Matt is passionate about marketing and business strategy and enjoys the San Diego life, traveling and music.