The past year has been, by virtually all measures, an absolutely unprecedented year for the US housing market. Following an economic crisis that led to possibly the most significant blow to consumer confidence since 2008, the housing market went on to defy expectations by reaching hotter levels than have arguably ever been seen in history.
Data shows that in 2020, despite an economic crisis that saw more than ten million jobs lost, house prices rose by 10%, one of the highest annual increases ever. But what is the housing market forecast 2021? If you are wondering “will the housing market crash in 2021” or is now the time to move, read on to find out what the pundits are saying.
Growth Will Slow, But Not Stop
One of the dominant housing market trends of 2020 was, obviously, white-hot growth. There is every indication that this will no longer be the case in 2021. Pent-up demand has largely been addressed and the rates of new sales have slowed markedly in the early months of the year. To answer the question “what is the current housing market?”, the best way to describe it would be “robust but sluggish”.
Big Cities Are Back
Another trend that attracted much commentary in 2020 was the collapse of overheated urban housing markets as demand for large homes with outdoor space skyrocketed. However, as the economy opens up, the appeal of the city has not faded, with prime housing markets such as New York, Chicago, San Francisco, and Los Angeles all see a return to growth. In fact, if you have a home in Chicago and want to sell quickly for a high price, you can now use cash home buyers to sell your home immediately.
Low Mortgage Rates Are Going Nowhere
The past five or so years have largely been defined by rock-bottom mortgage rates and there is no indication that this is changing anytime soon. In the first weeks of 2021, the average US mortgage rate stood ata rock-bottom 2.65%, less than half of the average rate only three years ago. Low mortgage rates are expected to be the industry norm for the foreseeable future, meaning that now is a good time to lock them in.
Defaults Will Rise
A record number of Americans have been the beneficiaries of foreclosure relief and forbearance in 2020, as part of extraordinary government support measures. However, these measures are all due to expire shortly, meaning that foreclosures will likely skyrocket to levels not seen since the 2008 crash.
The “Hot Suburb” Trend Will Continue
Finally, it is important to note that the reversal of a decades-long decline of the suburbs will continue unabated. The suburbs are, once again, hotter than ever, and this is not just a housing marketing gimmick. Buyers have re-assessed their priorities permanently. They no longer want a tiny city-center apartment with a laundry room – they want a garden, a home office, and storage space.
Your Housing Market Forecast 2021
When looking at the housing market forecast 2021, it is clear that we have another extraordinary year ahead. To stay on top of the key trends that will drive the US housing market in the months ahead, make sure to follow our expertly-curated Home & Garden section.