No one can deny the 2020 robust housing market was an unexpected bright spot in all the chaos and uncertainty of the pandemic. And so far that flame is still burning bright here in 2021. But is there trouble on the horizon?
The Good News
As 2020 headed into 2021 both Forbes media and Homelight, a leading San Francisco real estate referral firm, interviewed several of the nation’s top real estate economic experts who almost all agreed that for the foreseeable future home prices should stay stable or continue at a slight increase. This is mainly due to a continuing strong buyer demand coupled with a shortage of affordable properties, especially for first-time homebuyers, along with still record-low interest rates.
Cofounder and chief data officer at ResiShares, Dr. Alex Villacorta said, “In general, the upward momentum that we’ve seen in the second half of 2020 will likely continue in the first part of 2021.” While Daryl Fairweather, Redfin chief economist believes, “…Americans will continue to buy homes that fit their new lifestyle. As a result, 2021 will see more home sales than any year since 2006. Annual sales growth will increase from 5% in 2020 to over 10% in 2021.”
The Covid19 Vaccine Factor
While the experts all expressed concern surrounding the pandemic most were optimistic that with an accelerated Covid19 vaccine distribution plan in place interest rates will continue to stay low which in turn will continue to generate movement in everyone from first-time homebuyers to investors. Plus current homeowners will continue to take advantage of these unprecedented rates in order to refinance. Frank Nothaft, executive and chief economist at CoreLogic contends a shortage of homes suitable for first-time homebuyers and growing families coupled with the low mortgage rates is what is driving the market now and he strongly believes warmer weather and the swift nationwide deployment of the Covid19 vaccine will soon bring more inventory to the rapidly depleting housing market. “Many older homeowners who had planned to sell in 2020 decided to postpone their listing until the pandemic risk has dissipated,” Nothaft explained.
The Bad News
While almost all signs point to the housing market staying strong for the remainder of 2021, Todd Teta, ATTOM chief product and technology officer believes there is still strong uncertainly surrounding the housing market. While Teta agrees attractive mortgage rates is one positive influence he also feels between high unemployment, an uncertain job market, and the precarious future of the coronavirus, “The bottom line is that there are so many unknowns-more negative than positive-that the outlook is not great and is thoroughly uncertain.”