Housing in 2020 brought us historically low interest rates, low housing supply and above normal appreciation. But what does 2021 hold for housing? Will it boom even more or bust worse than ever? Will it benefit sellers or buyers?
Experts are optimistic about the future of housing in 2021:
Zillow predicts home sales growth will see the biggest gains since the 1980’s. As millennials age into the housing market and begin starting families, we are on track for 6.4MM new households by 2025! Fun Fact: the oldest cohort of the millennial generation turns 40 this year!
Lawrence Yun, Chief Economist at The National Association of Realtors, predicts a banner year for 2021 housing, projecting a 20% increase in new home sales and a 3 % increase in existing home sales—citing the federal stimulus package, COVID-19 vaccine distribution, low interest rates, and strong demand across the country.
According to Norada Real Estate Investments, consumers are eager to spend more on housing in 2021, as the economy continues to slowly recover from the pandemic. Strong growth is expected for housing sales and home prices. The housing market is largely being driven by two factors: a shortage of available housing inventory and extremely low-interest rates. Double-digit annual growth in both list and sale prices show a severe lack of inventory and extraordinary demand—a sign of a strong seller’s market.
So that’s all great. But what does it mean for Indianapolis and the surrounding areas? After all, real estate is a local affair and the trends will vary greatly by location. As it turns out, Indy is projected to be one of the top markets in the country.
“Indianapolis follows Dallas, Atlanta, and Phoenix in the magnitude of movers moving to the area. It has been recovering fairly well during the pandemic. Mobility to retail and recreation places is 8.1% below the level in January, which is better than the national rate of 20%. The unemployment rate is at 6.7%, also below the national rate of 7.9%.”
— December 2020 NAR National Housing Summit
Forbes Magazine notes Indianapolis as a hot market characterized by low inventory, with the average home on the market less than 2 weeks in the metro area! Appreciation was strong for a mid-western market reaching 10.5% in 2020!
So, who will emerge as real estate winners in 2021? Everyone!
Sellers will win as they put their existing houses on the market. Low inventory and higher demand will keep sellers in the driver’s seat. Strong demand likely means sales will stay close to the asking price. Multiple offers at lower price points in high demand are likely to continue well into the year. If you are looking to capitalize on the above normal appreciation, 2021 may be the year to consider selling to maximize your return.
Buyers will win with interest rates creating more affordability in the market. According to Fox News, mortgage interest rates are projected to remain around 3% throughout 2021. This is good news as some buyers may need to stretch their budgets in a competitive market to find the dream home they want. It’s also good for older millennials that are seeking more space as their families grow, and it is great news for empty nesters and down sizers who can change their lifestyle and maintain their budgets more easily.