As 2020 draws to a close, home buyers, sellers, investors, and all stakeholders in the real estate market are eagerly awaiting what 2021 holds for the industry.
The unprecedented developments brought about by the COVID-19 pandemic have probably changed the real estate landscape in the US forever. During the early part of the pandemic, the market saw a dramatic but expected decline, as stay at home orders and economic uncertainty affected home buying and selling activities.
Since then, however, several factors have turned the tables around and led to a significant rise in market prices and robust home buying activities:
- Interest rates were cut to historic lows. As of December 17, 2020, the interest rate for a 30 year Fixed Rate Mortgage was 2.67%
- There was a surge in relocation as remote working allowed people to move from congested and expensive big cities into more affordable suburbs and rural areas
- Inventory levels dropped significantly, and was 20% lower in October, 2020, compared to October, 2019
- The combination of low inventory and high demand has led to a surge in housing prices overall. In October, 2020, home prices grew by 16% compared to October, 2019.
What will these trends look like in 2021? Here’s a look at what the experts are saying:
- Sales will continue to grow
With the arrival of COVID-19 vaccines, the economy is seen to move back to normal in 2021. With this, the real estate market is expected to build on the gains it made in 2020 with new home buyers and sellers entering the market, making it one of the strongest years for real estate sales.
Redfin predicts home sales in 2021 will be the highest since 2006, with annual growth increasing from 6% in 2020 to more than 10% in 2021. With the expected slowdown of COVID-19 cases, new listings are expected to increase by 5%, resulting in a more balanced market.
Realtor.com’s chief economist Danielle Hale has a similar projection, and expects sales to grow by 7% in 2021.
- Home prices will continue to rise
According to Redfin, with more new listings giving buyers more options, home prices will rise at a lower rate of below 5% compared to 2020’s 6%. Realtor.com predicts home prices will increase 5.7% over 2020 prices.
- Mortgage interest rates will remain low
Redfin predicts FRM rates will increase in 2021 as the economy recovers, but will remain at historic lows of between 2.7% to 3% because of the generally slow recovery of the global market. This means home buyers will continue to find the market attractive and will not be deterred from purchasing properties.
- New construction activities will increase
According to Robert Dietz, senior vice president of the National Association of Home Builders, there will be a continued increase in single family home construction in 2021. Growth, however, will be slower compared to 2019 as current sales include homes that have not yet been constructed.
According to Redfin, the trend of relocating to lower density areas will continue as remote working is seen to be normalized even post pandemic. This, along with low interest rates, has boosted home builder confidence in the past year — something that’s predicted to be carried over to 2021.
If you have been thinking about investing in Lake Chelan real estate, now is a good time to do it. For expert guidance and support, get in touch with us at Coldwell Banker Lake Chelan Properties. We have the experience and knowhow to help you navigate this complex market and have a profitable and stress-free Chelan, WA real estate transaction.