According to the latestCoreLogicHome Price Insights Report, nationwidehome values increased by 8.2%over the last twelve months. The dramatic rise was brought about as the inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. AsCoreLogicexplained:
“Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply.”
Where will home values go in 2021?
Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.
According to theNational Association of Realtors(NAR), the current number of single-family homes for sale is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 withapproximately 370,000 fewer homes for salethan there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1.As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2.Some households impacted financially by the pandemic will be forced to sell.
Low mortgage rates have driven buyer demand over the last twelve months. According toFreddie Mac, rates stood at3.72%at the beginning of 2020. Today, we’re starting 2021 with ratesone full percentage pointlowerthan that. Low rates create a great opportunity for homebuyers, which is one reasonwhydemand is expected to remain high throughout the new year.
Taking into consideration these 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:
There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that home values in the country will continue to appreciate.