Are you thinking of buying a house this year? See where home prices could fall or rise in 2021. (iStock)
It has been a year since the coronavirus pandemic disrupted the US housing market. Since then, however, residential properties have remained resilient, as record low mortgage rates have boosted growth in home sales.
However, COVID-19 also created a sellers market in 2020. A sellers market is when the demand for real estate exceeds the supply of housing stock, while a buyer market is just the opposite – the supply of housing stock is greater than the demand. In a competitive real estate market, buyers often need to make an offer above the listing price, and bidding wars are common. The biggest disadvantage of the real estate market, which heated up in 2020, was the rapid appreciation of house prices.
When we start to see a light at the end of the tunnel with more vaccines reaching American weapons, many wonder what is in store for this year’s housing market. If you are considering buying a home, Credible can help you compare multiple mortgage lenders at once in just minutes. Use Credible’s online tools and be pre-qualified today.
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Will home prices fall in 2021?
When the shutdowns started in early 2020, it appeared that many Americans chose to leave densely populated metropolitan areas, such as New York and San Francisco, in favor of the suburbs. This urban exodus was fueled by remote work, making it easier to leave big cities and lose jobs, forcing many to expand their search outside the state.
According to CoreLogic’s home price index, home prices increased 9.2% year-on-year in December 2020, the biggest annual gain since February 2014. Meanwhile, Realtor.com’s housing market forecast for 2021 is that sellers will continue to get the highest dollar as house prices remain high, making accessibility for buyers a challenge. You can use a mortgage calculator to estimate potential monthly payments and check custom prequalified mortgage rates by visiting Credible.
The National Association of Realtors estimates that average annual home prices will increase by 8.0% in 2021 and 5.5% in 2022. At the moment, it is better to be a seller than a buyer.
“House prices are rising monthly now,” says Chuck Belden, of Hunter Rowe Real Estate. “There is no sign that I see this shift to a buyer market anytime soon.”
If you are planning to buy a home, you can visit a marketplace with several lenders like Credible to see if you qualify for a mortgage based on your current salary and credit score.
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Where to expect a drop or price increase
As the housing stock is so low, housing prices are rising broadly.
The Northeast of the United States recorded the highest national appreciation in property prices, of 5.5%, from December 2019 to December 2020. Other areas of the country were not far behind. The West grew by 3.3%, the Midwest by 3.2% and the South by 2.0%.
Areas with the highest appreciation of the residential price from December 2019 to December 2020:
- Columbus, Ohio: 16.9%
- Rochester, New York: 16.6%
- Philadelphia, Pennsylvania: 15.2%
- Birmingham, Alabama: 14.7%
- Phoenix-Mesa-Scottsdale, Arizona: 13.8%
If you want to buy a home in the current market, you can explore your mortgage options by visiting Credible to compare rates and lenders and get a mortgage pre-approval letter in minutes.
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What are the current mortgage rates?
As reported by Freddie Mac, the US weekly averages on February 23 are:
- 30-year fixed rate mortgage: 2.97%, up 0.16% in the previous week, but down 0.48% a year ago
- 15-year fixed rate mortgage: 2.32%, up 0.13% the previous week, but down 0.61% a year ago
- 5/1 year adjustable rate mortgage: 2.99%, up 0.22% the previous week, but down 0.21% a year ago
In an effort to stimulate growth during the economic downturn, the Federal Reserve may influence mortgage interest rates through monetary policy, such as when debt securities in the market are bought or sold. In March 2020, the Federal Reserve announced that it would buy billions of dollars in Treasury bills and mortgage-backed bonds. This supported the flow of credit and lower mortgage rates.
If you are thinking of buying a home or refinancing, you can explore your mortgage options by visiting Credible to compare rates and lenders.
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Home Buying Tips in a Sellers Market
Are you thinking of buying a house in the current market? You need to be prepared. “It’s crazy. I’ve never seen anything like this in 13 years [of real estate], ”Says Belden.
Here are your top two tips for staying competitive in the seller market:
- Find a buyer agent who knows what you’re doing
- Put your finances in order
1. Find a buyer agent who knows what you are doing
Today’s real estate market is a challenge and buyers need a broker who has the staff and resources available to get the ball rolling quickly.
2. Put your finances in order
Don’t go out and start looking for homes before you know what you can afford. What is your monthly payment? How much can you make as a deposit? Know your financial situation inside and out and talk to a lender to pre-approve a mortgage loan.
Are you ready to buy a home? Visit Credible to get in touch with experienced credit agents and get answers to your mortgage questions.
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