SANTA CLARA, Calif.,
Dec. 2, 2020 /PRNewswire/
-- Amid COVID-19 uncertainty, 2021 will be a robust sellers
market as home prices hit new highs (+5.7%) and buyer competition
remains strong, according to the realtor.com® 2021
housing forecast released today. Inventory is expected to make a
slow but steady comeback, which will give buyers some relief.
However, increasing interest rates and prices will make
affordability a challenge throughout the year.
"The 2021 housing market will be much more 'normal' than the
wild swings we saw in 2020. Buyers may finally have a better
selection of homes to choose from later in the year, but will face
a renewed challenge of affordability as prices stay high and
mortgage rates rise," said realtor.com® Chief Economist,
Danielle Hale. "With less cash and
no home equity, millennial and Gen Z first-time buyers will be
impacted the most by rising home prices and interest rates. While
waiting until the fall or winter months of 2021 may mean more home
options to choose from, buyers who can find a home to buy earlier
in the year will likely see lower prices and mortgage rates."
Realtor.com® 2021 Housing Market Forecast
Mortgage
Rates
|
Up to 3.4% by year
end
|
Existing Home
Median Price Appreciation
|
+5.7%
|
Existing Home
Sales
|
+7.0%
|
Single-Family Home
Housing Starts
|
Up 9%
|
Homeownership
Rate
|
65.9%
|
Realtor.com® forecasts mortgage rates will continue
to hover near 3% then slowly rise to 3.4% by the end of the year.
Home sales are expected to increase 7% and new construction will
increase 9% over the previous year. However, the strength of the
2021 housing market is highly dependent on the containment of
COVID-19 pandemic and staving off a double dip recession.
What 2021 will be like for buyers?
Buyers will find
some relief in 2021 as more homes hit the market, but many will
struggle with affordability as home prices continue to rise.
Mortgage rates will slowly rise toward 3.4% and will no longer help
offset the record breaking prices. Additionally, the time it takes
to sell a home will slow from late 2020's frenzy, but fast sales
will remain in many parts of the country, which will be
particularly difficult for first-time buyers learning the ins and
outs of homebuying.
What will 2021 be like for sellers?
Sellers will
continue to hold the upper hand throughout 2021 as the number of
buyers in the market outweighs the number of homes for sale. Home
prices won't grow as fast as they did in 2020, but steady increases
will continue to push home prices to new highs. Additionally,
sellers can expect their home to sell relatively quickly in 2021,
so having their next home lined up will be key. Many sellers are
also buyers themselves, so they will struggle with the same issues
when it comes to purchasing their next home.
Forecast key 2021 housing trends
- Millennials continue to drive the market while Gen-Z become
market players - The largest generation in history,
millennials, will continue to shape the housing market as they
outnumber Gen-X and Baby Boomers. Older millennials will likely be
trade-up buyers while the larger, younger segment of the generation
age into their key home buying years. Meanwhile, Gen-Z will begin
to make their presence known in 2021 as they compete with younger
millennials for entry-level homes. The oldest members of Gen-Z will
turn 24 in 2021 and their impact on the market will only continue
to grow from here.
- Affordability becomes a growing obstacle - Buyers in 2020
received a huge boost in affordability as mortgage rates pushed to
new lows throughout the year, however, a lack of inventory and
strong demand drove prices up, erasing most of the boost. As
mortgage rates are no longer able to counteract rising home prices,
affordability will be tested for buyers across the board in 2021.
Home price increases are expected to slow as affordability gets
stretched throughout the year. Buyers will need to act with a sense
of urgency if they want to lock in a low rate before home prices
increase even more in 2021.
- Inventory will begin the slow road toward recovery - A
lack of homes for sale has plagued the U.S. housing market for the
last five years. The problem only intensified in 2020, in large
part due to an estimated shortfall of nearly 4 million newly
constructed homes heading into the year, as well as sellers pulling
back due to COVID-19. The number of homes for sale is expected to
slowly rebound in 2021, but the road to recovery will be long
because the market has to make up for multiple years of declines.
Additional homes hitting the market will offer buyers some relief
in 2021, but it won't be enough to tip the scales in favor of
buyers. As inventory slowly begins to replenish and buyer demand
for homes remains steady, sellers will continue to be in the
driver's seat.
- Suburbs will shine if remote work stays around - As
COVID-19 lockdowns gripped many of the nation's largest cities,
buyers flocked to nearby suburbs in search of increased space. Now,
more and more workers are finding the freedom to work remotely.
This has sparked intense interest in suburban homes, further
exaggerating a trend that had been slowly emerging over the last
couple of years. The big question is what demand will look like
once a coronavirus vaccine is widely available. If companies
require workers to return to the office, demand may wane.
Conversely, if companies commit long-term to remote work, demand
for these homes could see an additional boost in 2021.
Wildcards that could shake things up in 2021
- COVID-19 - The deck is stacked with wildcards for 2021.
The most impactful will be the U.S.'s ability to control and
contain the spread of COVID-19 as well as distribute a vaccine.
Additional lockdowns and quarantines could put a dent in housing
inventory and sales, slowing the market and putting increased
pressure on buyers. Conversely, if a vaccine is rolled out quickly,
it could lead to better than expected sales and a strong increase
for home prices and inventory. Either way, COVID-19 will have a
large impact on the U.S. housing market in 2021.
- Double dip recession - The possibility of a double dip
recession is still in play for 2021. As the U.S. continues in a
K-shape recovery, a gap is widening between those with and without
jobs as well as industries recovering well versus those seeing
continued lack of business. In the short term, this could lead to
less consumer spending which could more broadly impact businesses
and economic growth. In the long term, this could impact the U.S.
housing market as "would-be" buyers disappear from the market,
cooling demand and driving down home prices. The current question
is how long the K-shape can diverge before the impact begins to
cascade into the broader economy and other previously less-affected
sectors such as housing.
2021 Metro Housing Forecast (Top 100)
Metro
|
2021 Sales
Growth % y/y
|
2021 Price
Growth % y/y
|
Akron,
Ohio
|
5.3%
|
4.2%
|
Albany-Schenectady-Troy, N.Y.
|
7.1%
|
3.7%
|
Albuquerque,
N.M.
|
4.5%
|
3.2%
|
Allentown-Bethlehem-Easton, Pa.-N.J.
|
0.3%
|
4.9%
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
3.6%
|
6.2%
|
Augusta-Richmond
County, Ga.-S.C.
|
5.1%
|
3.2%
|
Austin-Round Rock,
Texas
|
8.4%
|
4.6%
|
Bakersfield,
Calif.
|
10.5%
|
3.7%
|
Baltimore-Columbia-Towson, Md.
|
4.8%
|
6.2%
|
Baton Rouge,
La.
|
6.5%
|
2.6%
|
Birmingham-Hoover,
Ala.
|
3.7%
|
3.2%
|
Boise City,
Idaho
|
9.8%
|
9.1%
|
Boston-Cambridge-Newton, Mass.-N.H.
|
5.4%
|
5.7%
|
Bridgeport-Stamford-Norwalk, Conn.
|
9.7%
|
7.8%
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
6.3%
|
4.0%
|
Cape Coral-Fort
Myers, Fla.
|
1.5%
|
4.3%
|
Charleston-North
Charleston, S.C.
|
9.5%
|
4.3%
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
13.8%
|
5.2%
|
Chattanooga,
Tenn.-Ga.
|
4.9%
|
3.5%
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
8.3%
|
3.5%
|
Cincinnati,
Ohio-Ky.-Ind.
|
4.9%
|
3.8%
|
Cleveland-Elyria,
Ohio
|
6.7%
|
2.7%
|
Colorado Springs,
Colo.
|
5.4%
|
6.2%
|
Columbia,
S.C.
|
8.1%
|
5.4%
|
Columbus,
Ohio
|
10.3%
|
7.6%
|
Dallas-Fort
Worth-Arlington, Texas
|
11.3%
|
4.4%
|
Dayton,
Ohio
|
0.7%
|
1.7%
|
Deltona-Daytona
Beach-Ormond Beach, Fla.
|
5.4%
|
6.3%
|
Denver-Aurora-Lakewood, Colo.
|
12.5%
|
5.4%
|
Des Moines-West Des
Moines, Iowa
|
6.9%
|
2.8%
|
Detroit-Warren-Dearborn, Mich
|
-2.8%
|
4.9%
|
Durham-Chapel Hill,
N.C.
|
4.8%
|
4.3%
|
El Paso,
Texas
|
10.6%
|
6.4%
|
Fresno,
Calif.
|
8.9%
|
8.5%
|
Grand Rapids-Wyoming,
Mich
|
9.1%
|
3.6%
|
Greensboro-High
Point, N.C.
|
6.8%
|
4.1%
|
Greenville-Anderson-Mauldin, S.C.
|
4.3%
|
1.3%
|
Harrisburg-Carlisle,
Pa.
|
14.4%
|
3.8%
|
Hartford-West
Hartford-East Hartford, Conn.
|
12.1%
|
3.4%
|
Houston-The
Woodlands-Sugar Land, Texas
|
5.3%
|
4.6%
|
Indianapolis-Carmel-Anderson, Ind.
|
4.1%
|
2.3%
|
Jackson,
Miss.
|
5.3%
|
1.9%
|
Jacksonville,
Fla.
|
9.4%
|
5.0%
|
Kansas City,
Mo.-Kan.
|
12.1%
|
3.5%
|
Knoxville,
Tenn.
|
7.9%
|
5.7%
|
Lakeland-Winter
Haven, Fla.
|
5.1%
|
4.9%
|
Las
Vegas-Henderson-Paradise, Nev.
|
12.0%
|
5.2%
|
Little Rock-North
Little Rock-Conway, Ark.
|
1.9%
|
1.5%
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
10.0%
|
7.3%
|
Louisville/Jefferson
County, Ky.-Ind.
|
7.0%
|
4.2%
|
Madison,
Wis.
|
5.1%
|
2.1%
|
McAllen-Edinburg-Mission, Texas
|
10.0%
|
3.6%
|
Memphis,
Tenn.-Miss.-Ark.
|
9.1%
|
4.8%
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
3.7%
|
7.1%
|
Milwaukee-Waukesha-West Allis, Wis.
|
6.3%
|
6.0%
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
0.5%
|
4.8%
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
3.1%
|
4.8%
|
New Haven-Milford,
Conn.
|
8.6%
|
3.1%
|
New Orleans-Metairie,
La.
|
5.3%
|
4.2%
|
New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
-3.8%
|
0.5%
|
North
Port-Sarasota-Bradenton, Fla.
|
10.3%
|
6.6%
|
Oklahoma City,
Okla.
|
5.8%
|
3.0%
|
Omaha-Council Bluffs,
Neb.-Iowa
|
1.4%
|
4.9%
|
Orlando-Kissimmee-Sanford, Fla.
|
10.1%
|
5.8%
|
Oxnard-Thousand
Oaks-Ventura, Calif.
|
12.5%
|
5.5%
|
Palm
Bay-Melbourne-Titusville, Fla.
|
11.6%
|
4.7%
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
7.0%
|
4.5%
|
Phoenix-Mesa-Scottsdale, Ariz.
|
11.4%
|
7.0%
|
Pittsburgh,
Pa.
|
9.2%
|
4.1%
|
Portland-South
Portland, Maine
|
2.0%
|
6.4%
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
8.1%
|
6.2%
|
Providence-Warwick,
R.I.-Mass.
|
4.5%
|
5.5%
|
Raleigh,
N.C.
|
6.0%
|
3.9%
|
Richmond,
Va.
|
6.2%
|
4.5%
|
Riverside-San
Bernardino-Ontario, Calif.
|
12.4%
|
5.5%
|
Rochester,
N.Y.
|
8.4%
|
5.1%
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
17.2%
|
7.4%
|
Salt Lake City,
Utah
|
7.5%
|
5.7%
|
San Antonio-New
Braunfels, Texas
|
7.2%
|
4.3%
|
San Diego-Carlsbad,
Calif.
|
11.3%
|
5.5%
|
San
Francisco-Oakland-Hayward, Calif.
|
1.3%
|
8.4%
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
10.8%
|
10.8%
|
Scranton--Wilkes-Barre--Hazleton, Pa.
|
6.7%
|
1.1%
|
Seattle-Tacoma-Bellevue, Wash.
|
8.9%
|
9.7%
|
Spokane-Spokane
Valley, Wash.
|
3.8%
|
5.6%
|
Springfield,
Mass.
|
8.1%
|
4.2%
|
St. Louis,
Mo.-Ill.
|
3.4%
|
3.8%
|
Stockton-Lodi,
Calif.
|
8.2%
|
6.1%
|
Syracuse,
N.Y.
|
4.2%
|
4.6%
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
8.7%
|
7.5%
|
Toledo,
Ohio
|
3.9%
|
3.3%
|
Tucson,
Ariz.
|
3.4%
|
4.5%
|
Tulsa,
Okla.
|
2.7%
|
2.0%
|
Urban Honolulu,
Hawaii
|
5.2%
|
1.6%
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
8.1%
|
1.8%
|
Washington-Arlington-Alexandria, DC-Va.-Md.-W.
Va.
|
5.2%
|
6.7%
|
Wichita,
Kan.
|
2.4%
|
3.4%
|
Winston-Salem,
N.C.
|
2.6%
|
4.4%
|
Worcester,
Mass.-Conn.
|
3.5%
|
4.5%
|
Youngstown-Warren-Boardman, Ohio-Pa.
|
6.1%
|
4.5%
|
About realtor.com®
Realtor.com®
makes buying, selling and living in homes easier and more rewarding
for everyone. Realtor.com® pioneered the world of
digital real estate 20 years ago, and today through its website and
mobile apps is a trusted source for the information, tools and
professional expertise that help people move confidently through
every step of their home journey. Using proprietary data science
and machine learning
technology, realtor.com® pairs buyers and
sellers with local agents in their market, helping take the
guesswork out of buying and selling a home. For
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visit realtor.com®.
Media Contacts:
Cody Horvat,
cody.horvat@move.com
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