Without clairvoyance, it would’ve been nearly impossible to foresee most of the events that unfolded in 2020. In the real estate realm, who could’ve guessed a global pandemic, citywide shutdowns, and widespread unemployment would’ve provided further fuel to already red-hot housing markets spanning the country.
However, with a million-plus Americans vaccinated inside of two weeks, economic experts are considering what’s likely to come in 2021 as we slowly return to some sense of normalcy. There’s finally a glimmer of light at the end of the tunnel—but once we’re in the clear, the time it takes to repair COVID’s collateral damage remains to be seen.
The good news for investors? Expect more of the same—or better—with regard to real estate in the coming year. The housing market will continue to hold strong as the rest of the economy rebounds from the coronavirus-driven recession, predicts Daryl Fairweather, chief economist at Redfin.
And Fairweather’s 2021 economic forecast, released Dec. 15, only gets more specific from there. Read on to inform your real estate investing strategy next year.
Prediction #1: Mortgage rates will remain historically low at 3%.
Thirty-year-fixed rates may tick up over the next 12 months, but if so, it will happen slowly and insignificantly. It won’t be enough to put off buyers, although it might impact their willingness to pay a premium to land property.
“Mortgage rates will remain low primarily due to a sluggish global economic recovery,” Fairweather explains.
Prediction #2: There will be more home sales than in any year since 2006, but price growth will slow.
New listings declined in 2020 compared to the previous year—particularly in coronavirus hotspots. But “as COVID-19 cases hopefully decline due to vaccination, Redfin expects more new listings to make for a more balanced market and more home sales.”
Prediction #3: There will be more new homes built than in any year since 2006.
Low interest rates have incentivized homebuilders to borrow for construction projects, and commercial builders have largely sat out 2020, making it easier to meet labor, material, and land demands for new homes.
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