Happy New Years all, I’m hoping this year brings you health and prosperity. I would guess that more people than ever before celebrated (at home) the arrival of 2021 as an overwhelming relief. So here’s my year-end wrap on real estate.
Real Estate will be one of a few industries that helps pull us out of the economic downturn as opposed to 2008 when it dragged us into the downturn. While home prices continued to appreciate in the train towns of North Jersey and across the country, the real driver of this year’s booming real estate market were record-low mortgage rates making homes more affordable despite rising home prices.
As a result, Affordability reached its highest level in 30 years in 2020 and buyer demand surged. Mortgage Rates are projected to stay low until economic activity begins returning to pre-Covid levels. According to Lawrence Yun of the National Association of Realtors, “In 2021, Rates will be similar or modestly higher, maybe 3%…” So the trends will most likely stick around in 2021 even if we end up with a slight increase in mortgage rates and a more moderate increase in prices. It’s a great time to Refinance.
So Low Inventory helped drive prices higher in 2020. Many of the sellers who listed in the last 9 months were rewarded with multiple bids and a sale price above list. So despite the currently rising number of Covid cases wreaking havoc on many peoples’ lives and employment, the hope of vaccinations eventually ending the pandemic will probably give more sellers confidence about finally putting their home up for sale this year. As a result, 2021 inventory will most likely rise above 2020 levels but still remain low historically. Take advantage of low inventory by being one of the few homes on the market in your price range.
The wave of unemployment that accompanied the pandemic probably sent a good number of homeowners into Mortgage Forbearance. However, since the level of inventory has been at record lows, there’s room for the market to largely absorb the foreclosures resulting from job losses. So no doubt foreclosures are coming, there will most likely be a lower chance of an inventory/foreclosure glut.
As a result of more (but not too much) inventory, experts are predicting a 7% increase in the number of home sales compared to last year. Home prices will continue to rise, but at a more steady and slower pace – Danielle Hale, Chief Economist, Realtor.com
The graph below shows the underlying Strength of Demand year over year as 2020 showing traffic was far above 2019 levels except for the months of March and April. With rates expected to stay low, expect demand to remain strong.
With eleven years of experience helping sellers and buyers, I’d love to help you map your next move. Let’s chat – 201 600 8141