We witnessed home prices escalate to new heights in 2020, but as we enter into this new year, there are questions as to where home values will go from here. Corelogic has reported that home values rose by a drastic 8.2% nationwide over the course of last year. The combination of low housing supply with record low mortgage rates drove prices higher, all while continuing to strengthen buyer demand. As we reflect on the growth in the real estate industry last year, we now have the opportunity to forecast the trends of the market as we transition into a new year.
Low Housing Supply
On average there are an astounding 270,000 less homes for sale than there were one year ago at this same time. The National Association of Realtors has even reported that there are 1,080,000 single family residences currently for sale. Experts are now speculating that with the health crisis alleviating, homeowners will gain more confidence and begin putting more houses on the market, which in turn will help the housing shortage.
High Housing Demand
At the beginning of 2020, mortgage rates were averaged around 3.7% and now are an entire percentage point lower than that. Low mortgage rates will continue to strengthen buyer demand as we move into 2021. There is heavy buyer saturation in today’s real estate market making the competition more intense than ever before.
The real estate market is showing unprecedented strength as we transition into 2021. Home values are expected to continue appreciating because of the low housing inventory and decreasing mortgage rates which encourage strong competition between buyers. It is forecasted that this trend will continue but it will be interesting to see what happens as sellers become more comfortable putting their home on the market as the health crisis lessens. If you are looking to buy or sell this year, always remember that Seven Gables will help along every step of the way.