Do you want to know what home buyers can expect as we look to 2021? Despite COVID-19 and the widespread economic upheaval in 2020, the real estate market has still been chugging along. The housing market this year has pretty much been a seller’s market owing to rising prices, low inventory, and the consequent bidding wars. If you’ve held off on buying a home because of these market conditions, you probably want to know what 2021 is looking like. To help you plan accordingly, here’s what Salt Lake home buyers can expect going into 2021.
Continuing Housing Trends Salt Lake Home Buyers Can Expect in 2021
First, you should be aware that the major market conditions of 2020 are expected to continue into 2021. These continuing conditions that Salt Lake home buyers can expect include . . .
CONTINUING LOW MORTGAGE INTEREST RATES
“The industry’s major players all expect mortgage rates to stay in the low 3% range come 2021. The Mortgage Bankers Association predicts the year will start off at a 3.1% average rate for 30-year loans, while Fannie Mae expects an even lower 2.8%. Freddie Mac projects a 3% average across the entire year.”
Such low-interest rates will make buying a home much more affordable for many buyers, but especially first-time buyers. Lower rates and lower monthly mortgage payments will allow them to buy more home.
PRICES STILL RISING
Although the rate of increase slowed a bit in 2020, home prices continued to rise. And that trend is expected to continue into and throughout 2021. “It’s likely that home prices will continue their upward climb in 2021, though it looks like it may be at a slower pace than in previous years. MBA projects a 2.4% jump in prices (much better than last year’s 5.1%), while Freddie Mac expects an increase of 2.6%. Fortunately, if prices do rise, low-interest rates will help blunt the impact slightly, though it may mean buying a smaller home or dealing with a slightly higher monthly payment.”
INVENTORY REMAINING LOW
Some industry watchers believe inventory may begin to increase, providing buyers more homes to choose from. This change is expected to be the result of more new construction and more housing starts. But others disagree.
Many more experts say that Salt Lake home buyers can expect the following: “So far, US real estate market trends for 2021 point to an increase in home sales. At the same time, there is no clear evidence to date that the housing inventory shortage will be remedied to match or outpace the demand. Housing development continues to lag across the nation. Although the US housing market did see a rise in home building during May through July, data for August 2020 reveals a drop.”
The supply of existing and new homes so far remains low for the fourth quarter of 2020. It appears unlikely, then, that this trend will change appreciably by 2021.
2020 – A Definite Seller’s Market
To further examine what Salt Lake home buyers can expect in 2021, let’s take a closer look at the 2020 market . . .
Many experts thought that the advent of the coronavirus and COVID-19 would bring about a buyer’s market because home sales dropped dramatically and many sellers pulled listings. But this expectation just didn’t pan out (not for very long anyway).
September of 2020, median home prices had risen 11% year over year, and active listings were down 39% year over year. This means that 2020 has been and remains a strong seller’s market. COVID-19 slowed the phenomenon for a time, but then it regained momentum.
So the question is . . . can Salt Lake home buyers expect the same for 2021?
Will 2021 Be a Buyer’s or Seller’s Market?
The consensus of industry experts is that, yes, Salt Lake home buyers can expect 2021 to be a seller’s market as well – and for basically the same reasons 2020 was (as we indicated above) . . .
- “Mortgage rates are likely to remain low”
- “Housing inventory will remain low”
- “Demand for real estate will rise due to a combination of factors”
- “Home prices will continue to see strong gains”
The upshot of this is that sellers will be in the driver’s seat with respect to negotiating prices.
Local Markets and Local Agents
This may all sound like a dire situation for buyers, but it really isn’t as bad as it sounds. For one thing, remember, mortgage interest rates will still be near record lows, which is always great news for home buyers. And it may turn out that inventory increases after all, which moves things more toward a buyer’s market. In addition, housing conditions vary (often widely) from local market to local market, making some areas and neighborhoods better for buyers. So 2021 can still be a good year for buyers. To get the lowdown, then, on what Salt Lake homebuyers can expect going into 2021, contact us today at (801) 755-3865.