Real estate and mortgage predictions for 2021
While no one has a crystal ball (none of us predicted a global pandemic or record mortgage rates in 2020), here are some predictions from the experts on what to expect in the real estate market in 2021. .
House prices will go up
Across the country, listing prices rose 13.3% in 2020, according to Realtor.com, while the median price of existing homes for all housing types in November was $ 310,800, up from 14.6% compared to the previous year. Prices have increased in all parts of the country. Experts predict that prices will again remain on an upward trajectory.
Home sales growth will be the strongest since the 1980s
Even if home prices go up, it won’t hold back home sales. In fact, the growth in home sales in 2021 could be the biggest since the 1980s, according to Matthew Speakman, economist at Zillow.com.
“The wave of Millennials – with the equally huge Gen Z cohort behind them – aging in their early years of home buying and looking to enter the market is expected to keep demand strong,” said Speakman.
Mortgage rates will rise slightly
Rates ended the year at 2.67%, according to Freddie Mac, a government-sponsored company that backs millions of mortgages. They dropped slightly during the first week of January.
But homeowners should expect rates to increase slightly later this year.
“Homeowners need to know that the low interest rate environment is as low as mortgage rates ever will be. If they want to get a low mortgage rate, I would encourage them to do so at the start of the year, ”said Daryl Fairweather, chief economist at Redfin, a real estate brokerage firm. “Rates will go up a few tenths this coming year. “
Rates are expected to reach 3.2% by the end of 2021, according to forecasts from the Mortgage Bankers Association.
The volume of refinancing will decrease
These historically low rates fueled a refinancing boom last year. The 30-year average mortgage rate hit a record low 16 times in 2020.
Some lenders have declared an origination volume up to four times than normal. Overwhelmed lenders have even offered rates on average higher than those recorded by Freddie Mac to keep the volume down. The Mortgage Bankers Association refinancing activity index was 100% higher than a year earlier for the last week of December.
While purchases are expected to rise 8.5% to a new record high of $ 1.54 trillion in 2021, refinancing operations are expected to slow next year, cutting nearly in half to $ 946 billion.
If these predictions come true, rising house prices and slightly higher interest rates could mean that those who act quickly to secure their next home will benefit from lower monthly payments and / or better value for money.
If you are considering a move or refinance and would like a personal consultation to develop your best strategy, contact me and my team at Fountain Mortgage. We specialize in full consultations with home buyers to create a plan for success.
This weekly sponsored column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating and empowering clients to make the best financial decision possible for their situation. Contact Fontaine today.
Mike Miles’ NMLS ID number: 265927; Fontaine Mortgage NMLS: 1138268