2020 was undoubtedly a year that no one expected. While the housing market has had ups and downs in the past, “global pandemic” was not a factor that had been on the radar.
The arrival of the coronavirus in the United States saw many people forced to work remotely in March. With businesses closed and parts of the economy at a standstill, this initially impacted the housing market.
However, record-low interest rates encouraged borrowers to buy and refinance their homes. The US housing market forecast for 2021 may see an increase in housing activity as a result.
Because of a few months’ pause in the spring of 2020, the housing market did not see its usual influx of homes for sale. As we headed into summer and people adapted to living amidst the COVID-19 virus, this changed. However, inventory remained very low in some areas.
Low inventory meant that buyers looking for homes found few choices. With an increase in buyers wanting to take advantage of the low mortgage rates, sellers saw offers within days.
Inventory may increase as more sellers are willing to list their homes again. New construction, which saw a pause as well, will resume and boom, offering more options for buyers. However, strong demand from buyers will keep the inventory moving.
Because of the demand from buyers, home prices will continue to remain high. Some areas saw home prices skyrocketing as much as 10 percent in year-over-year trends. Offers would come in over list price and with few contingencies as buyers fought for their chance at home ownership.
With home prices high, buying a home may be out of reach for some people. Those who have had their jobs impacted by the pandemic or young homebuyers may not be able to afford increased down payments and monthly payments. This may force some people out of the housing market.
2020 saw some definite trends in buyer preferences that will likely remain in 2021. With the huge increase in remote work, buyers are rethinking a potential home’s layout. Many signs point to remote work being a permanent arrangement at some companies, so this trend will continue.
With social distancing at the forefront of many people’s minds, home buyers turned increasingly to the suburbs. They wanted more space to shelter, work, and live. Remote work made a long commute less of a factor.
Finally, a segment of the population may find that they would no longer qualify for a home loan. Between increases in home prices and unstable or decreased income, these people will stay in the rental market. They also may consider the rent to own homes process as an alternative.
Overall Housing Market Forecast 2021
While many areas of the economy are hoping to return to normal in 2021, many aspects of our lives have changed permanently. The housing market forecast shows signs of increased inventory, but buyers’ preferences will remain shifted as a result of COVID-19.
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