Everyone’s excited that 2021 is finally here, and we can’t blame them! We’re excited for the new year, too. Even though 2020 was a bummer for so many reasons, the housing market was not one of them. In fact, it was a bright spot in the economy, and no one expects that to change this year.
So, just what can we expect from the housing market in 2021? Here’s some of the buzz people are talking about.
Housing Sales Will Continue to Grow in 2021
As anyone who was in housing last year knew, we were swamped with both home sales and refinances! We grew like crazy here at Kairos Appraisal due to the incredible demand for appraisers in this housing market. Home sales rose 3.4% last year, and in 2021, the NAR® expects the growth rate to accelerate all the way up to 7%!
In short, there’s going to be just as much demand as ever for homes, for loans to buy them, and for appraisals (though we may see a drop-off in refinances). We’re continuing to grow our team of trusted appraisers around the country to be ready to serve you and your clients with the quick turn times and accurate reports you’ve come to expect from Kairos Appraisal.
Interest Rates Will Likely Stay at Record Lows
The Federal Reserve has indicated that, to keep the economy stable during our continued recovery from the pandemic, they have no intention of raising rates anytime soon. That means that record-low mortgage rates are likely here to stay for a while, though some economic experts are predicting a slight increase toward the end of 2021. Even so, rates will likely stay in a historically low range.
The attractive interest rates are pushing even more buyers into the market. In many cases, these were homebuyers who may have been holding off but are now entering the market for the first time. For many people, the increased purchasing power that comes with low interest rates was just the push they needed to go ahead and buy.
Top Housing Markets Will Continue to Shift
Homebuyers have shifted away from high-density areas in the city to the more spacious suburbs as the pandemic has dragged on. As people have learned to live and work from home, they’ve realized that they need larger homes for all that time spent inside, and larger homes are often cheaper in suburban areas.
Many companies are likely to allow people to continue working from home for the foreseeable future, which means that some of these more affordable markets will likely see growth throughout the year. Austin, Texas, in particular, has emerged as a hot market, and other Southern and Midwestern cities where square footage is more affordable are seeing similar growth.
Technology Will Be Increasingly Important to the Mortgage Process
We saw some big changes in the housing industry this year due to the pandemic forcing us all to better utilize technology to engage buyers and finish deals. 2020 changed the game—from touring properties to locking interest rates. We’ll continue to see the housing industry utilize technology even more next year, and we’re excited about the changes this could mean for the appraisal industry, too.
The appraisal industry is under a lot of pressure to use technology to increase turn times for appraisals, which would really help the whole loan process go a lot quicker. At Kairos, we’re working on an exciting app that we really believe could be a game-changer for the industry. Stay tuned for more on that throughout the year!
New Construction is Going Up
Builder confidence is up (near record highs, in fact), and we continue to expect single-family construction starts to increase. This is partly because builders aren’t competing with people who are building commercial property. However, we may continue to see problems with homebuilding supplies. Higher costs and long delivery times plus a labor skills shortage are challenging builders right now. On the other hand, low interest rates are allowing builders to finance at a lower cost, and the cheaper land in the suburbs is helping them build homes profitably.
According to a recent Redfin forecast, more new homes will be built this year than in any year since 2006. New construction has already picked up since the beginning of the pandemic, and this will do only good things for the housing market in 2021.
In short, we expect it to be great for sellers in the 2021 housing market, but it’s also a pretty good time to be a homebuyer, as well. As for those of us in the industry, well, let’s buckle down and continue working hard. If you need support from the friendliest AMC around, just go here to get in touch.