Will the Housing Market Stay Hot? Predictions for 2021
April 12, 2021
When people remember the housing market 2020 made possible, they’ll remember fast and furious buying and selling like we’ve never seen before. It was a big year for the US housing market no matter how you look at it.
Now, as experts make big and bold housing market predictions for 2021, it’s time to look forward and backward. First, what can we learn from the housing market 2020 ushered in? And second, what exactly is the housing market forecast for the remainder of 2021?
Let’s get started…
Revisiting the 2020 Housing Market: The Highlights
The numbers speak for themselves. The US housing market saw the average home value spike 8.4% from 2019 to 2020. In addition, home sales increased more than 22% from 2019 to 2020. These were record-setting numbers. And while the momentum continues, experts are making some optimistic housing market predictions for 2021
2021 Housing Market Forecast: Sunny & Bright
The 2021 housing market forecast from here on out is tricky to nail down because there are so many moving parts and pieces. But one thing is for sure: the competition for the best homes is fierce — even more so than housing market 2020 created. Here’s a look at some of the biggest factors to keep an eye on:
New Buyers Entering the Market
Hello, Millennials. Come on down! According to the National Association of REALTORS’ Home Buyers and Sellers Generational Trends Report, Millennials make up the largest share of the homebuying population at 38 percent. They’re also the fastest-growing segment. Both of these metrics mark a dramatic shift from just a few years ago. Some housing marketing predictions reveal that Millennials are interested in low-maintenance homes, where yardwork comes included. Additionally, they desire amenities that bring neighbors together and to feel like part of the community. Both of these are hallmarks of StyleCraft’s Gateway homes, which are designed and priced with first-time buyers in mind.
Defining Demand for the US Housing Market
People can want to buy homes, but the homes need to be available for it to happen. It’s a potentially challenging dynamic for those interested in resale homes, as housing market predictions revealed a record 29.5% drop of housing inventory in February 2021. Despite this obstacle, the housing market 2020 sparked is expected to remain strong. One reason for this rosy housing market forecast is because of the role that new-construction homes are expected to play, as new-construction home inventory is predicted to climb. Adding to all this is the fact that so many homebuyers were locked out of the market from March–July 2020, which created a wave of pent-up demand.
Having More Buyers Than Sellers & What it Means for Homebuyers
Expect some very competitive homebuying situations if you’re considering a resale home. Whether you’re considering resale or new construction, housing market predictions suggest you may still be able to catch a low interest rate in 2021. After all, the annual average interest rate for a 15-year fixed-rate mortgage in the housing market 2020 created was 2.61% — the lowest it’s been since Freddie Mac started reporting nearly 30 years ago! Even if rates go up a bit, US housing market conditions should ensure you’ll still be able to lock in an extremely attractive mortgage rate.
New-Construction Homes vs. Resale Homes in 2021
With homeowners cooped in their homes over the past year-plus, they’ve had plenty of time to plot out the wide-open spaces they want in their next home. And new-constructions is the clearest path to getting all the right space in all the right places. Some housing market predictions put new-construction housing starts over 1 million in 2021 — something that hasn’t occurred since 2007. Another impact to the US housing market is more affordable, entry-level new-construction homes hitting the market.
By all accounts, 2020 was a banner year for the US housing market. The market for 2021 is shaping up to present some challenges and opportunities for homebuyers, builders, and sellers. Only time will tell how our housing market forecast meets the reality unfolding before our eyes. And soon it will be time to start making housing market predictions for 2022.