The housing market was rising this season using record-low mortgage rates along with a surprising wave of relocations made possible by distant work. Meanwhile, home prices have pushed new boundaries as consumer demand continues to surge. As we near the end of 2020, here is a peek at the expectations of property pros for 2021.
Danielle Hale, realtor.com main economist: We anticipate sales to increase 7 percent and costs to grow yet another 5.7 percentage in addition to 2020s currently substantial levels. While we expect mortgage rates to sign upward slowly, sales and cost growth are going to be propelled by strong need, a recovering economy, and low mortgage prices. High customer demand and still-lagging provide will maintain costs rising, but at a lesser rate than 2020 as buyers contend with mortgage rate and cost increases that produce affordability challenges.
While younger Millennial and Gen-Z buyers are expected to play an increasing role in the home marketplace, fast-rising costs will produce a larger barrier to entry to many first-time buyers in those generations that do not have existing home equity to exploit for down payment reductions. Although distribution is predicted to lag, we do anticipate the declines to slow and possibly stop at the close of the year since sellers grow more familiar with the industry environment and new building picks up. Single-family housing starts are expected to increase the next 9 percent in 2021. Overall, the market will stay seller-friendly, but buyers will still have comparatively low mortgage rates and an eventually improving choice of houses available.
Robert Dietz, senior vice president, and chief economist, National Association of Home Builders: With homebuilder optimism near record highs, we anticipate continued profits for single-family building, albeit in a slower growth rate than in 2019. Some slowing of new house sales expansion will happen as a result of the simple fact that an increasing share of earnings has come from houses which haven’t begun building. However, buyer visitors will stay strong given positive demographics, changing geography of the home requirement to lower-density markets, and low-interest prices.
However, supply-side headwinds will last. Residential construction continues to confront restricting factors, such as higher prices and longer delivery times for construction materials, a continuing labor skills deficit, and worries over regulatory cost burdens. For the apartment building, we’ll observe some weakness for multifamily rental growth especially in high-density markets, even while remodeling requirement should stay strong and expand farther.
Elana Knoller, Better.com chief product creation: Homeowners and also the home industry at-large will use technology much more next year to participate buyers and implement deals. 2020 altered the game in all from traveling properties to searching for and locking rates and engaging in protected eClosings.
We anticipate homeowners looking to refinance will do this earlier rather than later to benefit from the low rate of interest environment. Though the Fed has signaled that it does not plan to raise prices soon, doubt over exactly what the new government might do along with broad accessibility to a Covid-19 vaccine, along with what we expect is an advancing market, could bring an end to this ultra-low rates which we have seen this past year. We’ll continue to observe the increase of Millennial home purchasing no matter the speed history.
Todd Teta, chief product officer in ATTOM Data Solutions: We are exiting 2020 using several dynamics that will most likely keep this mad housing market moving. There’s incredibly low stock, with less than 500,000 houses for sale, mortgage rates are in 50-year lows, and there is no indication yet of sellers that are distressed out of the downturn coming out. All these supply and demand variables will drive prices even higher in the first half of this year. Inventory and pricing must ease a little in the second half of this year, and bigger economic headwinds could begin showing up. Until then, buyers must be careful and vendors jubilant.
Selma Hepp, CoreLogic deputy chief economist: Even though 2020 didn’t surprise us with its fair share of surprises, 2021 could nevertheless have more surprises in store for us. However, expectations for the housing market remain generally optimistic. First, rates of interest, which have prompted several buyers in 2020, are anticipated to stay low and will help ameliorate some of their affordability issues caused by rapid home price appreciation found in 2020. To put it differently, very low mortgage rates are still supply increased buying power, particularly for first-time house buyers.
Secondly, first-time house buyers will continue being a powerful force in the marketplace as the largest cohorts of Millennials are turning 30 — crucial household formation years. But additionally, the earliest Millennials are contributing to the trade-up sector. Because of this, 2021 house sales activity is expected to stay strong and outpace 2020 levels. Third, stock levels are very likely to find some progress, partly from vendors who’ve been on the sidelines, partly from troubled homeowners, and partly from the new structure. However, the housing market will continue to battle with an imbalance between demand and supply, which will cause continuing competition among buyers and additional home price appreciation, albeit at a much lesser rate than seen in 2020.