The housing market has survived the pandemic and the economic downturn caused by the restrictions created to stop the virus from spreading. Despite lockdowns and mass unemployment everywhere, Americans have found themselves taking out loans in order to fund the purchase of a house.
This year has been good for aspiring homeowners. As COVID-19 spreads across the United States, mortgage loan rates everywhere, making the purchase of homes affordable to more people.
Sellers had a good year, too. More people find themselves in the market for a new house. Listings are bought as soon as they go up. Multiple interested buyers mean a bidding war, a process that increases the final cost of the property.
2020: a Seller’s Market
The average cost of houses in the U.S. increased this year because of the increased demand, lower supply, and the resulting bidding wars.
In May 2020, the median price for all existing home types was $284,600. In June 2020, it rose to $295,300.
For comparison, around the same time last year, the median existing-home prices across all housing types were $278,200 (May 2019) and $285,400 (June 2019).
Of course, the average value of homes differs in each state. Currently, the most affordable price for a home is in West Virginia where a single-family house costs about $106,840. The highest average home value is in Hawaii where a single-family house would cost $727,931. California clocks in at second place, recording a median single-family house value at around $588,050.
The year 2020, as they say, is a seller’s market. However, will the same trend continue in 2021? Is it time to sell before the pandemic ends and everyone returns to normal?
Housing Market to Remain Strong
Forecasts all agree on one thing: the housing market will not see a decline any time soon. With the economy slow to recover, and as the virus continues to spread, interest rates will likely stay low.
The mortgage rates will see an increase, but it will likely remain low. Although borrowers will not see more record-breaking drop next year, it still will become favorable.
The National Association of Realtors (NAR) expects the mortgage rates average to stay around the 3% mark. Meanwhile, the Mortgage Bankers Association predicts an average of 3.3% next year.
Home Prices to Continue Increasing
The coming year will also favor the sellers. As mortgage rates continue to be affordable to more people, the volume of buyers in the market for a new house will also rise.
The cost of a house will continue to increase, too. However, do not expect the same rapid incline in prices. Experts believe that things will start to slow down in 2021.
Still, there are things to look forward to. The NAR says that home prices will gain 3% next year. CoreLogic sees up to a 7.3% gain in home prices over the next several months ending in October 2021.
The Competition Will Be Low
Many people who deferred the sale of their house in 2020 because of the pandemic will likely list their properties in 2021. The inventory of available existing houses went down by 36% this year — the lowest in nearly two decades.
The limited supply brought the costs up. In 2021, inventory will slowly but steadily make a comeback but, with the demand still strong, the competition will not be tough. There will still be a lot of buyers ready to acquire real estate property with their newly-approved low-interest mortgage loans for the next several months.
Owners who postponed the sale of their home will reap more rewards next year. Sellers who already have a starter home or need to move soon should not hesitate to put their house in the market to take advantage of the demand as well as the higher sale price in 2021.