Get A Quote
What’s Next: Real Estate Predictions for the Rest of 2021
So far, 2021 has been one for the record books for the housing industry. Industry experts continue to report that houses are selling as quickly as they are listed! However, as the COVID pandemic becomes less of a shock to our lifestyles, we may see more of a normalization in the housing market in the months to come. Here’s what could be in store for the housing market for the remainder of 2021:
The Cost of Homes Will Remain High
It still may seem backwards, but somehow during the COVID pandemic more people wanted/needed to buy a home. This aided in inflation of home prices, and also caused a huge demand in the marketplace. According to Realtor Magazine, this demand may well continue through 2021. This means home prices are most likely going to remain high.
According to National Association of Realtors (NAR), the median home price rose to $350,300 in May, up 23.6 percent year-over-year. In May 2020, the median home price was $283,500. But with prices remaining high, what does that mean for the crazy home buying competition?
Competition for New Homes May Start to Cool Down
Throughout the last year, the housing market has been filled with buyers looking to relocate, purchase for the first time, or move to a new home. Afterall, most of us spent a ton of time at home in 2020, so it is no wonder people were looking for their next place to settle into. Because of this, many real estate agents were seeing homes they listed fly off the market in a matter of days…sometimes even hours. The competition was fierce with the surge of home buying. So, what’s next?
According to Lawrence Yun, chief economist at NAR, “The surge phase is over.” One of the big reasons the surge in competition is dwindling is because of the inventory of new homes rapidly increasing. Builders have been working hard to catch up with the demand for new homes. This means the supply for homes will keep increasing, resulting in less demand. There is also an increase in older homeowners willing to sell their homes based on the price and conditions it could go for. Because of this, we are seeing more homes being listed than earlier in 2021.
Mortgage Rates Could Begin to Increase
Let’s keep it real, the rates have been great—even sometimes unbelievable. And this has definitely helped fuel the booming housing market during COVID. The pandemic truly didn’t slow down new home buying in the last year, in fact, it’s been higher than ever. But with a shift in the demand, and perhaps a change in the competition, were does that leave mortgage rates, and what about COVID and its current impact?
Bankrate.com states, “Prominent real estate groups foresee little changing by the end of the year when it comes to rates. The Mortgage Bankers Association expects the 30-year fixed-rate mortgage averaging 3.3 percent over the last three months of 2021; Freddie Mac’s most recent outlook pegs rates closing out the year at 3.1 percent, while Fannie Mae has a more generous forecast for borrowers: a 2.9 percent average rate over the remainder of 2021.
Still, there are a lot of what-ifs that can be analyzed right now when trying to figure out exactly where the mortgage rates are headed. According to Ralph DiBugnara, founder of Home Qualified, “A lot of the fluctuations we may see in interest rates over the remainder of the year will hinge on the end of some unemployment benefits and some people returning to work as well as possible restrictions caused by COVID. If we continue to see positive job reports with a decreased number of those who are unemployed, we will experience a possible rise in interest rates. However, if coronavirus restrictions start to shut down some of the normalcy for businesses again, I think we could see rates stay low and possibly even be reduced.”
Velocity Title Keeps Your Clients Moving Forward
No matter what the market brings in the remainder of 2021, Velocity Title is focused on making the final step in the home buying or selling process as easy and efficient as possible. Our game plans are specific to your client’s unique needs. No matter how busy the market gets, you’re never just a number at Velocity Title, you’re Family. Experience the Velocity difference, or contact us today.