The coronavirus pandemic has had an immense impact on the global economy, affecting areas such as housing, employment and the financial markets. According to the National Association of Realtors (NAR), existing home prices are expected to gain only 1.2% in 2021 compared to the 9% growth rate seen in 2020.
Home prices have continued to rise since the start of the pandemic due to various factors such as increased demand and limited supply. A recent survey by NAR showed that 75% of Realtors said their agencies had noticed an increase in buyer activity last month. In fact, existing home sales saw a jump in November 2020 compared to the year prior. This has been attributed in part to the belief that the pandemic will end eventually and individuals may be eager to take advantage of low interest rates.
However, some analysts expect the market to slow down in the coming months. Mortgage rates, while still at record lows, are projected to rise over the course of the year. This could lead to a decrease in demand as buyers may not be able to afford higher rates. Additionally, the lack of new construction could further limit supply and drive up prices.
In addition to market conditions, the extended period of economic uncertainty could have an impact on the housing market. Consumers may be more hesitant to invest in big-ticket items such as homes due to job loss or uncertain economic conditions. This could result in fewer people buying and/or selling their homes, a potential sign of what’s to come in 2021.
The 2021 home price forecast predicts that the market will slow down significantly in comparison to 2020. Despite this, it is important to remember that the housing market is dynamic and can be greatly affected by changes in the economy. Furthermore, NAR’s survey found that over 80% of agents surveyed felt optimistic about their business prospects for 2021, indicating that there is still hope for the housing market despite current uncertainty.
In conclusion, according to the experts, we can expect 2020’s 9% home price growth rate to be reduced to just 1.2% in 2021. While this is a significant drop, it does not necessarily mean that the real estate market will suffer. It is likely that we will see some fluctuations in the market, but overall, the market should remain stable. Low mortgage rates, an increased level of buyer activity and a healthy level of optimism among Realtors all suggest that the housing sector will remain strong going forward.
This article was contributed on Nov 17, 2023