Housing Market 2021
If you’re looking to buy a home, you’ll stand the best chance in a buyer’s housing market. This is where listings are flush, demand is low and buyers have the upper hand. Not to mention most of the negotiating power.
Seller’s markets, on the other hand, are on the opposite side of the spectrum. They’re marked by high levels of competition and rising home prices. Also, in most cases, you’ll have a harder (and more expensive) time finding a home.
We saw the latter conditions in 2020. Buyers faced unprecedented competition. Also, increasingly out-of-reach home prices for much of the year.
Buyer’s Market in 2021
Don’t count on seeing a buyer’s housing market in 2021, at least according to experts. Most major players are projecting home prices to rise. While strong construction could put more inventory on the market, it likely won’t be enough to tip the scales in buyers’ favors.
It does seem like buyers will see some relief at some point. For example, home prices are still expected to rise in 2021, but at a smaller pace than we saw in 2020. Freddie Mac projects prices to rise only 2.6% — much better than 2020’s 5.5% clip.
Low mortgage rates will also help offset those rising prices. Though rates won’t hit the bargain-basement numbers seen this year, most economists project they’ll stay in the high-2% to low-3% range. Fannie Mae actually predicts a 2.8% rate across the entire year.
The biggest problem will be the low levels of inventory met by ever-increasing demand. Work-from-home opportunities have contributed to this. There’s also rising demand from younger buyers to consider.
“The oldest millennials will turn 40 in 2021. The younger end of the generation will turn 25,” said Danielle Hale, chief economist at Realtor.com, in her recent 2021 forecast. “Older millennials will be trade-up buyers. Many will have owned their first homes long enough to see substantial equity gains. The larger, younger segment of the generation age into key years for first-time homebuying. At the same time, Gen Z buyers — who are 24 and younger in 2021 — will continue their early foray into the housing market.”
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