Home Prices Expected to Rise 5.7% More in 2021
The nation’s median home price is on track to reach new peaks over the next 12 months, according to realtor.com
According to a forecast from economists at realtor.com home prices are expected to rise more than 5% in 2021, even as the broader economy faces a longer road to recovery,
Strong demand, which has fueled an increase of home sales across the country during the pandemic, is projected to drive total sales up 7% in 2021 compared to this year. Meanwhile, interest rates are projected to inch up to 3.4%.
A severe housing shortage will be alleviated to some extent in 2021, as a strong sellers’ market entices more homeowners to list their homes for sale. That will give buyers some relief and enable more deals, though the market is expected to remain tipped in sellers’ favor throughout the year, realtor.com forecasts.
Danielle Hale, Realtor.com’s chief economist said:
“Buyers may finally have a better selection of homes to choose from later in the year, but will face a renewed challenge of affordability as prices stay high and mortgage rates rise.”
Many delayed their home purchases until summer, while home buyers spurred by more work flexibility and shifting housing needs have continued to buy homes well into the fall.
In many ways, the strength of the U.S. housing market during the pandemic has underscored wealth disparities in the country.
Senior economist at realtor.com, George Ratiu said:
“A lot of the activity is being driven by Americans who are employed, or they are self-employed, they’ve been able to manage work, have savings and beyond savings are invested in other assets.”
As a result, luxury housing will continue to experience robust sales next year, driven by demand for homes outside of major urban centers.
High-cost cities, such as New York and San Francisco, may have little if any increase in sales as affluent individuals continue to look further afield amid work flexibility. Realtor.com projects that the New York metropolitan area, which includes parts of New Jersey, will see the most anemic price growth in 2021 and home sales decline 3.8% year-over-year.
Many major companies, including Microsoft, Nationwide Insurance and Google, have announced some of their employees can work from home permanently, a shift that will continue to pay off for smaller cities and holiday home markets.
h/t Mansion Global
