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April 2, 2021

What does 2021 Have in Store for Home Prices?

Home prices appreciated significantly during 2021. Can homeowners expect more of the same or should they prepare for a correction?

According to the latest CoreLogic Home Price Insights Report, nationwide, home values increased by 10% over the last twelve months. The dramatic rise happened when the inventory of houses for sale reached historic lows at the same time buyer demand skyrocketed as a result of record-low mortgage rates.

Where will home values go in 2021?

Home price appreciation in 2021 will continue to be determined by an imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase, making it a great time to sell your house.

Housing Supply

According to realtor.com, we are entering 2021 with approximately 443,000 fewer homes for sale than there were one year ago. However, there’s some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
  1. As the health crisis subsides, more homeowners will be comfortable putting their houses on the market.
  2. Some households impacted financially by the pandemic will be forced to sell.

Housing Demand

In addition, low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. We started 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason why demand is expected to remain high throughout the year. Taking into consideration the projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts:

Bottom Line

There’s still a very limited number of homes for sale compared to the demand from purchasers looking to buy them. As a result, home values will continue to appreciate, making this season a pivotal time to sell your house.

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Work With a Real Estate Professional if You Want the Best Advice

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