Those interested in purchasing homes are looking at the enticing low mortgage rates. For the first time since the pandemic began, all four major components of real estate activity—the demand, supply, pricing, and sales—are growing above the pre-COVID pace. The third quarter 2020 rental vacancy rate in the Northeast (5.6 percent) was lower than the rates in the Midwest (6.9 percent) and South (7.6 percent), but it was not statistically different from the rate in the West (5.1 percent). Housing market predictions for 2021 review. The Federal Reserve Bank of New York's Center for Microeconomic Data released the September 2020 Survey of Consumer Expectations, which shows improvement in the labor market and spending expectations, as well as less pessimistic views about their own financial situations in the year ahead. As a result, this is an indicator that things are heading towards a balanced real estate market. The 2-bedroom median dropped 2.9% to $3690. Therefore, when there is an unusually low vacancy, the price of housing will tend to be bid up over time. If the reopening is followed by another wave of the COVID pandemic leading to a shutdown, the “double-dip” is a possible result (W-shaped recovery). The increased long-term delinquency is due to participation in forbearance programs, and foreclosures are down 80% year-over-year. After rising to 5.3% y/y in the third quarter, growth will slow to 2.0% y/y by the end of next year. Excluding food and energy prices, the PCE price index increased by 3.5 percent, in contrast to a decrease of 0.8 percent. The overall recovery index is showing the greatest recovery in San Jose, Los Angeles, Las Vegas, Rochester, and Boston. An expected reacceleration of GDP growth in 2021 should help push sales volumes higher. “The current economic expansion is getting long in the tooth by historical standards, and more late-cycle signs are emerging,” said Scott Anderson, chief economist at Bank of the West, who was among those predicting a 2020 recession. That will push rental growth down to -1.5% year-over-year over the next couple of quarters. Pessimistic housing market predictions may scare some from listing their home, but many motivated sellers will list their property. In the week ending November 7, the housing supply component, which tracks the growth of new listings, has continued to decline, for the second week in a row, to 95.9, down 2.7 points over the prior week, and 4.1 points below the January baseline. Property prices are expected to rise again in the third quarter of 2021, but 'a V-shaped recovery in the housing market is not expected', the CEBR has indicated. San Jose, CA: 1-bedroom median decreased 4.9% to $2120 from the month prior and the 2-bedroom median decreased 3.2% to $2680. This increase in buyer activity can go on for the coming winter season as long as mortgage rates remain low and jobs continue to recover. Housing price growth expectations returned to their pre-COVID-19 levels, and debt delinquency expectations remained low. The millions of student debt borrowers behind on their payments also have future ramifications for the housing markets. The median inflation expectation remained unchanged at 3.0 percent at the short-term horizon, while it declined 0.3 percentage point to 2.7 percent at the medium-term horizon. The sellers are enjoying the fastest listing price growth recorded in more than two years. Home prices across Canada could tumble about seven per cent in 2021, as unemployment dampens the hot real estate market, according to a forecast by Moody's Analytics, Inc. Time on the market is 13 days faster than last year – almost 2 weeks faster than a year ago. According to Zumper's National Rent Report (November 2020), overall, the national 1-bedroom median rent decreased 0.5% last month to $1225, while the 2-bedroom median decreased 0.4% to $1483. Housing Impact Predictions For Recession 2021; 3 Expert Insights On Housing Inventory In Today’s Market; Home Prices Up 5.05% Across the Country [INFOGRAPHIC] Appreciation Is Strong: Time To Sell? If the current rate of progress continues, more than a million loans will be behind on payments when forbearance programs begin to expire in March 2021. It is important to note that new listings are an important contributor to the volume of home sales, and a failure of new listings to improve beyond the current pace of their decline could prove to be an obstacle for further sales improvements this year. With rates at or near historic lows, refinancing could help you save by reducing your monthly payments and reducing the total amount of interest that you pay over the life of the loan. This is important since half of all home mortgages are given to Millennials. The post The Housing Market Could Fall Very, Very Sharply by 2021! What will 2021 be like for buyers? Financing Your Home Purchase / Home Buying, How To Buy Your New House Before You Selling Your Current Home Strategies, Owner Selling Home FSBO – SETTING THE RECORD STRAIGHT, 2019 Housing Market Forecast: Facts Not Fiction, Real Estate Investment Strategies: Leveraging Short-Term Rentals, Selling Investment Property? Total existing-home sales that include single-family homes, townhomes, condominiums, and co-ops, jumped to a seasonally-adjusted annual rate of 6.00 million in August. Amid Covid-19 uncertainty, 2021 will be a robust sellers market as home prices hit new highs and buyer competition remains strong, according to the 2021 housing forecast … According to Zillow’s Weekly housing data through Nov 7, the downward slide of inventory that began in late May continued, dropping 1.6% week over week — the largest weekly drop since January. For the year 2021, Yun projects existing-home sales to reach 5.86 million, supported by an economy that he expects to expand by 4% and a low-interest-rate environment, with a 30-year mortgage rate average of 3.2%. In the third quarter of 2020, the national vacancy rates were 6.4 percent for rental housing and 0.9 percent for homeowner housing. In the third quarter, the percent of homeowners and renters behind on their payments fell slightly from the prior quarter. With inventory falling to record lows, mortgage lending standards tightening, new and existing home sales are precited to fall back over the remainder of 2020. The average sales price was $405,400. The homeownership rates in the Midwest, South, and West were higher than the rates in the third quarter of 2019, while the rate in the Northeast was not statistically different. The result would be that prices are going to plummet again and the real estate sector will likely cool off. It remains above the pre-COVID baseline. Hence, home price growth will flatten, with a forecasted increase of just 1.1 percent. And they are forced to compete for new housing stock since Boomers and Generation Xers tend to hold onto their homes. The exact figures, however, are less important than the explanation behind the expected drop. Home Buyer Lost The Bid, But Won The House! We typically see a decline in demand and a big increase in time on the market before the end of November. It is 16.8 points above the January baseline, suggesting buyers and sellers are continuing to connect at a faster rate going into the fall. This short-term deceleration in sales volume can be attributed in large part to an expected slowdown in GDP growth, the fading impact of historically low mortgage rates, fewer sales occurring that were deferred from earlier this year, and historically low levels of for-sale inventory. In 2020, historically low mortgage rates are certainly making home purchases more affordable. The ‘home price’ component of the recovery index – which tracks growth in asking prices – is now at 109.3, an increase of 0.1 points since last week. Regionally, all housing markets except for the South saw index declines this week. Applications for home purchase loans improved slightly on the week, halting a streak of four straight weekly declines. The previous forecast predicted a 3.8% increase in home prices over this time frame. The volume of new listings has also been trending lower over the past couple of weeks, as sellers across the country are reluctant to list amid the rising cases of coronavirus. The typical home spent 53 days on the market this October, which is 13 days fewer than last year and one day less than last month. The time-on-market index reached 16.8 points above the January baseline, suggesting buyers and sellers are continuing to connect at a faster rate than the pre-Covid period. However, the housing market forecast should not affect your decision to buy a home. “The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs and small towns,” said NAHB Chief Economist Robert Dietz. That is why home sales are expected to be around six million in 2021 instead of the previously projected 6.3 million. In Manhattan, however, the median rental price decreased by 3.9% between August 2019 to August 2020, and the vacancy rate has increased by 3.15%. This is why the median home price was rising in 2019. It went up for most of the month of March, and then it hit this peak and came down rapidly and fast over the course of essentially the end of March, April, and right through to the beginning of May where it bottomed out. Another factor affecting this equation is the rising average price of new homes. The state unemployment rate is forecast to jump to 13.3 percent in 2020, before dropping to 8 percent in next year. Although these markets were hit by the COVID-19 pandemic first, they were also some of the first to recover, with caseloads easing over time. How To Upgrade An Investment Property For Less Than $2000, Financing Your Home Purchase / Market Watch. At the 10% down-payment mark, the qualifying income was $55,528 and with a 20% down-payment, the income required to qualify for a mortgage was $49,358. Capital Economics’ recent housing market predictions are that new and existing home sales will fall back over the remainder of the year. Home sales, which had gone on a declining spree due to social distancing & economic unpredictability, have now surpassed the pre-COVID levels. The moratorium is expected to cost the two government-sponsored enterprises between $1.1 billion and $1.7 billion, and it protects more than 28 million homeowners across the country., Current avg. The most recovered markets for home prices include Austin, Pittsburgh, Riverside-San Bernardino, Houston, and New Orleans, with a home price growth index between 111 and 116. Housing market experts predict that sharp declines in the prices look improbable as the buyer demand has remained relatively strong despite the pandemic. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate. Among larger metropolitan areas, homes saw the greatest decline in time spent on the market compared to last year in Hartford (-23 days); Virginia Beach (-22 days); and San Diego (-20 days). Over the long term, the U.S. will probably face slower growth, a weaker dollar, and a huge debt related to paying for the crisis response. The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 3.5 points in September to 81.0, rising for the second consecutive month and continuing the rebound from late spring. The home price appreciation rate has slowed so far but prices are still rising. The release date of September Existing-Home Sales by N.A.R. ® 2021 Housing Market Forecast. These local housing supply trends show that sellers were returning faster in the more expensive housing markets. The West (114.8) continues to lead the pack in the recovery, but its index decreased most, by 3.9 points compared to last week. Fannie Mae’s Duncan offers 2021 housing market forecast The economist shares his thoughts on the unemployment rate, housing starts, the likelihood of a … Homebuyer interest has surpassed expectations post-pandemic and it continues to outpace last year’s levels over the last few months. The rental vacancy rate in the South was lower than the third quarter 2019 rate, while the rental vacancy rates for the Northeast, Midwest, and West were not statistically different from the third quarter 2019 rates. It also shows the strength of the recovery since the beginning of May. The NAHB/Wells Fargo Housing Market Index (HMI) index is designed to measure sentiment for the U.S. single-family housing market and is a widely watched gauge of the outlook for the U.S. housing sector. In the top 10 most-recovered markets, asking prices are growing at 14 percent year-over-year, on average. Vacancy rates affect the price of housing. In the second quarter, GDP decreased 32.8 percent, or $2.04 trillion (tables 1 and 3). If you're wondering what the state of the housing market will be like over the next six months, especially if you're an investor, then here is some good news for you. But that's not the case., Affordability index (nationally) – Median household income vs median home price On the other hand, in a market in which there's a scarcity of vacant homes or apartments, the power dynamic is reversed. If you qualify for a mortgage, you have a more limited selection and prices close to what they were before the coronavirus hit, but you have relatively little competition. At the moment, the moratoriums on foreclosure have kept lenders from being able to even start their processing of defaults. With high interest from buyers and a limited flow of new listings, the total active listings have been lagging behind from the previous year. Or you may need to wait a few months to see things shift from a buyer’s market to a balanced market. All Rights Reserved. New home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be up – even after missing the spring buying season due to the pandemic lockdown. ... Video of Dr. Longhofer's presentation on the 2021 Wichita Housing Forecast on October 20, 2020. Economic and Strategic Research (ESR) Group, 50-year low average mortgage rate of 3.15%, San Francisco Bay Area Real Estate Market & Investment 2021, California Real Estate Market: Prices | Trends | Forecast 2021, Las Vegas Real Estate Market: Prices | Trends | Forecast 2021. This will be the key factor driving housing demand as state economies steadily reopen. To afford a typical mortgage payment, a given family needs to spend no more than 25% of income on its mortgage payment (for a 30-year fixed-rate mortgage with a 20% down payment). Overall, the housing inventory in the 50 largest U.S. metros declined by 39.6% percent year-over-year in September. Months of double-digit price growth and record level inventory may finally be translating into buyer fatigue. Capital Economics is estimating four million homes will be sold in 2020. Before the coronavirus pandemic began, the U.S. housing market was already short from the supply side. Meaning, general housing market predictions are that housing prices will fall through the end of 2020 before recovering in Q3 of 2021. The positive forecast is that there is expected a short-term bump in sales for the early fall due to pent up buyer demand, fear of the pandemic reducing, and low mortgage rates. The housing supply will need to carry consistent momentum forward to balance the relentless growth in demand. However, hot economies eventually cool and with that, hot housing markets move more towards balance. The landlords (or sellers) are in a position to tend to bid up the rents. Although the fastest price growth has been recorded since January 2018 it is yet to be seen whether higher asking prices will translate into higher selling prices. However, a sustained seller comeback is uncertain — the fear of the rise in coronavirus cases in the winter season is still looming large. Among these 50 largest metros, the time a typical property spends on the market has improved at similar rates across all four regions. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic. The share of home buyers looking at suburban markets near large cities and even across state lines is showing a rebound, as consumers look to a post-pandemic landscape, with cities in the Southeast seeing renewed interest. With many sellers remaining on the sideline and a decline in housing starts, inventory will remain constricted. When refinancing a $200,000 outstanding loan balance into a 30-year fixed-rate mortgage, at the recent 50-year low average mortgage rate of 3.15%, your monthly mortgage payment would now be $859. The ‘pace of sales’ component has remained stable this past week and continues to remain above the pre-COVID baseline. The official unemployment rate jumping ten percentage points or more means many people are out of work. But suburbs had the lowest rental vacancy rate of 5.5 percent, 1.5 percentage points lower than principal cities. NAHB noted that a shift toward suburban areas working in tandem with incredibly low-interest rates has kept builders busy. To help borrowers and renters who are at risk of losing their home due to the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) are extending their moratorium on foreclosures and evictions until at least until December 31, 2020—originally moratorium was supposed to expire at the end of August. The resulting pent up demand has driven homebuyers back to these markets, but now with an increasing preference for neighborhoods outside of the dense city centers and more toward suburban areas. Unsold inventory sits at a 2.7-month supply at the current sales pace, down from 3.0 months in August and down from the 4.0-month figure recorded in September 2019. appeared first on The Motley Fool Canada. Regionally, 27 of the 50 largest markets saw the new listings index surpass the January baseline, two more than last week. The home price forecast has been adjusted to higher for 2021. Mortgage rates and slow but steady improvements to the job landscape continue to propel confidence for first-time buyers. This amounted to 506,000 fewer homes for sale compared to October of last year. This creates an incredible buying opportunity in the local housing markets if you can secure funding or have the cash to start buying once this inventory hits the market. Part 2: MARKET SUMMARY 4th Quarter, 2018 Housing Data: Michigan He’s also the host of the top-rated podcast – Passive Real Estate Investing. That may contribute to a decline in sale prices, but it presents an excellent buying opportunity. The current short-term extreme demand that is reflected in sharply rising prices, can be attributed to the pent-up demand for home purchases from the March-July period when a great part of the country was in total lockdown. According to their chief economist, Lawrence Yun, they are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market. Those still seeing the largest decline in newly listed homes include Nashville (-27.5%), Charlotte (-22.9%), and Richmond (-21.8%). And home prices will remain steady or drop just a few percentage points. Hays Regional Economic Outlook Conference Presentation "2021 Kansas Housing Markets Forecast" - October 22, 2020. Seventy-one percent of homes sold in September 2020 was on the market for less than a month. The good thing, at least for buyers and investors alike, is that house prices have nearly flattened and are poised to remain stable in the latter half of this year. Home price growth will flatten, with a forecasted increase of 1.1 percent, Inventory will remain low, but the rate of decline steadies and the mix of homes for sale shifts toward greater availability of lower-priced homes, Mortgage rates remain low and may slide under 3 percent by the end of the year, Home sales are constrained by low inventory and diminished seller and buyer confidence as the effects of COVID linger in the labor market, Buyers seeking affordability and space drive interest in the suburbs. Economic activities are ramping up in all the sectors, mortgage rates trend at historic lows, and jobs are also recovering. While more sellers are comfortable entering the housing market compared to previous months, the lack of further improvement in newly listed properties signals that a return to normal conditions for the housing market is still just beyond reach at this time. That’s about four times the number of average weekly applicants before the pandemic. The index which measures housing attitudes, intentions, and perceptions, using six questions from the National Housing Survey® (NHS), is a good indicator of the recovery and buyer and seller behavior. At the same time, the stimulus package that Congress passed in March was more than double the financial aid offered during the last downturn. Housing sales expected to stay high but taper through 2021. If this trend remains steady in the weeks ahead, that points to a seasonal slowdown, but if the time on the market shrinks by a greater amount, that’s a signal that 2020's housing market is going to remain hot even during holidays. 2021 housing market forecast: It’s about politics, not economics Financial protections set to expire during split congress November 23, 2020, 4:54 pm By Ralph McLaughlin And then they can just track whether things are improving or declining from that reference point. What will 2020 & 2021 be like for sellers? The housing demand is still very high but its rate of increase is expected to slow down in the coming few months before it surges back in the Spring of 2021. home prices and forecast The median U.S. rent stood at $1,771 in August, down 0.3% from July, the largest monthly decrease since September 2017, according to the real estate website Zillow. It will be well into 2021 before you will see a spike in single-family and condo foreclosures. Mortgage rates were predicted to likely bump up to 3.88 percent by the end of the year. Both prices and sales have been surging month-over-month breaking new records. As of November 7, the latest weekly housing market trends show that median listing prices continue to grow at 12.9 percent over last year, marking 13 consecutive weeks of double-digit growth in asking prices. All-cash sales accounted for 18% of transactions in September, unchanged from August but up from 17% in September 2019. This was equal to roughly 200,000 homes being taken off the market. If the pandemic worsens further in the coming months, the sales are forecasted to take a hit as sellers might again de-list their properties and buyers would also stay away. According to Yun, NAR’s chief economist, home prices will likely appreciate 4% in 2020, before moderating to 3% in 2021 as more new supply reaches the market. While many economists predict that home prices will continue to rise, much will depend on the economy’s ability to bounce back from the pandemic. The health & economic crisis poses a real upward hill for housing participants going into the winter season. 1 and 2-bedroom medians decreased by 13.5% and 9.2% from last year, respectively. Overall, newly listed homes in the largest 50 metros decreased by 5.3% compared to last year, but 34 out of 50 metros saw an improvement in the growth rate of new listings compared to last month. As affluent New Yorkers are buying houses in suburbs, the real estate market in those areas has prospered. We cannot expect the new listings to improve under such conditions. This is one of the more certain housing market predictions. Seller's real estate markets in the pre-COVID period are better positioned for a recovery in the months ahead. An affordability index of 100 would mean that the average person could afford the average home. The national median existing single-family home price in the first quarter of 2020 was $274,600, up 7.7% from the first quarter of 2019 ($254,900). As the population of millennials is increasing, the demand side of housing remains strong. Experts think that the economic cost we’ve paid to try to contain the virus will weigh down the economy into 2021. Locally, a total of 46 markets have crossed the recovery benchmark as of this week, two more than the previous week. The pandemic led to record-high prices, short supply, and economic uncertainty but despite all of that the buyer demand remained very strong. A V-shaped recovery can be seen. However, the current trends show that the lineup of buyers has not gotten significantly shorter since May. Instead, you should make the decision to buy a home based on your economic situation. In a market in which there are a lot of vacant homes or apartments, prospective tenants or buyers are at an advantage. This is good news for real estate investors looking to buy a rental property in a strong housing market. The rates in the Midwest and South were not statistically different from each other, nor were the rates in the Northeast and West. It is rare to find somone who really knows their stuff. With the supply of available homes continuing to balance, and the entry-level demand is expected to remain strong. And the homeowner vacancy rate of 0.9 percent was 0.5 percentage points lower than the rate in the third quarter of 2019 (1.4 percent) and virtually unchanged from the rate in the second quarter of 2020 (0.9 percent). A forecast by Haus shows home prices dropping between 0.5 and 2.5 percent from October 2020 to July 2021. According to Zillow, the housing market forecast for 2021 has improved but lingering economic uncertainty may temper some of the predictions. The payment deferral option allows borrowers, who can return to making their normal monthly mortgage payment, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity. The coming weeks should paint a clearer picture of whether demand is softening or will remain strong through the winters. The HMI index gauging current sales conditions rose two points to 90, the component measuring sales expectations in the next six months increased three points to 88, and the measure charting traffic of prospective buyers held steady at 74.