Our Guide to the Housing Market During 2021
Due to the ongoing COVID-19 pandemic, the housing market continues to be a seller’s market and fluctuates with the state of the country. The United States economy is being rebuilt and this rebuild will continue to help the real estate market flourish and thrive. Last spring’s lockdown, work-from-home orders, and cost-saving measures have increased the number of homes being purchased, despite layoffs and cut-hours. The market continues to be in the seller’s favor, but this needs to change to eliminate future market issues and the continued lack of supply in relation to demand.
There has been a listing shortage across the U.S. due to a booming seller’s market and low-interest rates on mortgages. People have also been moving out of cities to suburban neighborhoods which have caused a large decrease in houses available to new buyers. Property values have increased and will continue to be high until the pandemic comes to an official close. Looking at the year ahead, the market is predicted to stay the same and more homes are expected to be built across the country to help sellers build inventory.
The market has been heading in a V-shape for recovery meaning that new homes reached low levels that have not been seen in years, but eventually, these numbers will reach a plateau and then slowly rise back up. New home construction is now being fueled by low mortgage rates, limited inventory of existing homes, increased buyer interest in suburban areas, and work-from-home continuation.
The issue with the need for new construction is that demand is currently greater than the supply. The rising cost of lumber and scarcity of labor has pushed back new construction all over the U.S. The California wildfires have also caused a decrease in supplies and have made builders slow down the pace of construction. Home prices will continue to rise due to the lack of inventory and lack of lumber available for new homes.
Low mortgage interest rates have increased the number of new buyers, but this unfortunately causes a backup with lenders. Buyers love a good bargain as well as low-interest rates which are a dream come true for new homeowners. Purchase demands, new mortgage rates, and refinancing requests are causing lenders to be extremely busy. This is a constant struggle with the current housing market and can be frustrating to buyers, real estate agents, and lenders.
Despite the improvement of unemployment rates across the United States, we still have a long way to go before we are fully recovered from the COVID-19 pandemic. Job growth has slowed since August of 2020 and remains at the same level. The housing market will continue to stay the same until our economy recovers from the pandemic, unemployment rates go down, rates go up, construction supplies increase, and the seller’s market begins to slow.