As we all look toward new beginnings in 2021, it seems that the bidding wars and above-asking-price offers that have defined the recent housing market are here to stay and pent-up demand from homebuyers who took a holiday break will fuel January sales.
Low interest rates may also continue through the first quarter of 2021, which may see potential sellers take advantage of attractive refinancing offers in lieu of putting their homes on the market. The result: inventory constraints across in-demand suburban single-family markets. The good news is that those low rates will keep buyers hungry. Buyers who were initially on the fence about buying, are now aggressively looking because they believe the rates may go up at the beginning of 2021 and they want to take advantage of the historically low-interest rates.
Interest rates are not expected to reach above 3.4% in 2021, according to Realtor.com. The Federal Reserve has made clear it does not want to remove its monetary stimulus too quickly and originators have added capacity; both of which should help keep mortgage rates from rising too quickly.
Work from home continues to bolster markets
- Continued work from home mandates into 2021 will bring more buyers into the market as they consider housing options further away from corporate headquarters. Ashore Realty agent Ellen Corapi reports, “I’m hearing a more optimistic tone in the conversations I’m having with buyers about their home purchasing plans for 2021. Some are excited about the prospects of their employers deciding to continue with the current work from home model or adopting a hybrid model that will only require them to commute to the office once or twice a week over the next few years.”
Industry leaders (especially those at the helm of tech-based companies) are asking: “Does our workforce need to return to the office in pre-pandemic numbers?”
- Business Insider looks at the “20 major companies that have announced employees can work remotely long term.” Among them, Google continues its work from home policy until at least summer 2021.
- According to USA Today, many companies plan to create a flexible, “hybrid workplace” for thier workforce after the pandemic, which will reduce the number of days employees have to be physically present. That makes longer commutes even more viable for families who are looking to purchase away from urban centers and settle in quiet shore towns.
This new work model will make longer commute times more tolerable and open up the possibilities for them to consider buying in towns that are farther away from NYC & Philly where they can get more bang for their buck and be in a more desirable/relaxing area such as say, Brigantine Beach?
Positive market news kicks off 2021
Estimated price appreciation and home sales activity from Realtor.com’s 2021 Housing Market Predictions and Forecast…
- Existing home median price appreciation: Home prices are expected to rise 5.7% year over year by the end of 2021. For context, the year-end median price appreciation for 2020 will be about 7.6% above 2019.
- Existing home sales: Forecasted existing-home sales for 2021 look to be 7% above 2020. Much of that can be attributed to the traditional homebuying seasons that are expected to return as vaccines are rolled out in communities nationwide.
Summary of Realtor.com 2021 Housing Market Forecasts
Dara Blume Clewley, Director of Financial Risk and Economics at Better.com Mortgage Company insights into 2021:
“A perfect storm of low interest rates, pandemic-driven relocation, and an already strong purchase market have made 2020 a record-breaking year in the mortgage industry. It will be hard for 2021 to beat this, but we think it will still be a strong year for the industry, too. One wildcard for 2021 is government policy. On the one hand, the Biden Administration is likely to focus on affordable housing and expanding access to financing. On the other hand, if there was to be a hard stop to either the stimulus policies which have supported incomes and or the forbearance policies which have offered debt relief, that could force originators to tighten credit standards once more.”
“Mortgage rates hit their 12th all-time low of 2020 two weeks ago, but there are indicators that the conditions which supported the downward trend may be about to change. While rates are always unpredictable, sustained record lows are looking less and less likely, considering recent events. All things considered, if the government is able to pass stimulus measures, deployment of coronavirus vaccines continues, and the Fed pulls back its mortgage-backed securities purchases, there may be a relatively short window to secure a record-low rate. Conversely, failure in these areas could keep rates low, but would translate to unexpected setbacks. Trying to time the market is never advised, but given these factors, prospective home loan applicants may want to assess if it makes financial sense to pull the trigger sooner than later.”
Contact Ashore Realty Inc for a FREE market analysis to find out what your Brigantine Beach property is worth in today’s market!