2021 was an all around tough year. Although the Covid-19 pandemic brought the market to a near standstill for months, a quick recovery soon emerged as many homeowners reevaluated their space and what they need in a home going into 2021. Many experts are now forecasting that next year is one in which we can be optimistic about real estate for three key reasons.
1. The Economy Is Expected to Continue Improving
Tim Duy from the University of Oregon puts it this way:
“There is nothing fundamentally ‘broken’ in the economy that needs to heal…there was no obvious financial bubble driving excessive activity in any one economic sector when the pandemic hit…With Covid-19 cases surging again, it is understandably hard to look optimistically to the other side of this winter…Don’t let the near-term challenges distract from the economic stage being set for next four years.”
Projections on what specific shape or letter the recovery may most closely resemble has turned a bit into alphabet soup, however most parties earlier in the year agreed that the American economy was not facing similar challenges to those encountered during the great recession prior to the pandemic.
2. Interest Rates Are Projected to Stay Low
In the latest projections from Freddie Mac, interest rates for a 30-year fixed-rate mortgage are expected to remain at or near 3% next year. These low rates will continue to make homes more affordable, driving demand for housing in 2021.
3. Future Home Sales Are Forecasted to Grow
While the economy improves and interest rates remain low, homes are also expected to continue appreciating as more people buy in the coming year. Danielle Hale, Chief Economist at realtor.com, says:
“We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year.”
This piece also provides additional insights regarding generational trends, the ongoing inventory challenge, and a contrary projection regarding the direction of interest rates.
As the above experts and more continue to forecast that buyers and sellers are going to be active in 2021, take the time to connect with your prospective clients and leverage these projections to their advantage.