The experts are very optimistic about the housing market. If you recently pressed pause on your real estate plans, let’s chat to determine how you can re-engage in the process.
John Burns, CEO, John Burns Real Estate Consulting:
“A high-quality home has never been so important because people are spending so much time in the home…New home supply will ramp up beginning next year, as the homebuilders have only increased land-buying activity very recently, and it takes a while to get building approvals.”
Lawrence Yun, Chief Economist, National Association of Realtors:
“The demand for home buying remains super strong…With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.”
Home Price Appreciation Is on the Rise
Due to the undersupply of homes on the market today, there’s significant upward pressure on home prices. When there’s high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in more bidding wars, which drive price points higher in the home sale process.
In addition, there’s no evidence that buyer demand will wane. As a result, experts project home price appreciation will continue over the next twelve months. Here’s a graph of the major forecasts going forward.
Archana Pradhan, Principal Economist, CoreLogic:
“Given the continued economic uncertainty and lack of activity among existing homeowners (repeat buyers), we anticipate the inventory shortage to persist throughout the rest of the year, with inventory levels remaining at 20% to 30% below last year’s levels.”
Mike Fratantoni, Chief Economist, Mortgage Bankers Association:
“Interest rates for the 30-year fixed-rate mortgage will end this year at about 3% and could hit around 3.3% in 2021.”
What does a rise in prices mean for buyers?
When purchasing a home, it’s important to feel confident about your investment, and that it will increase in value over time. Home prices have been rising for 104 straight months, and are forecasted to continue going up, meaning your investment is a sound one. It also means purchasing a home before prices continue to climb might be your best move.
Home Price Appreciation
Forecasts over the Next 12 Months
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Today, some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low.
Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, notes:
“The likelihood of us having a foreclosure crisis again is about zero percent.” With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate.
Originally, many thought home prices would depreciate due to the economic slowdown from the health crisis. Instead, prices appreciated substantially. Over the next year, home values will likely rise even higher given the continued lack of homes for sale.