Mortgage rates at historic lows and a lack of available inventory are sustaining the US housing market’s demand. While affordability worries continue to grow, low mortgage rates, increased savings, and a strengthening job market all contribute to making homeownership more accessible to a wide number of potential buyers. Will the housing market, on the other hand, ever crash? Consider the most current trends and home market forecasts for the years 2021 and 2022.
This year’s housing market has been unusually healthy, with strong demand for houses in almost every region of the country. In the midst of this pandemic, the real estate market has emerged as a bonanza for sellers and a cause of concern for purchasers. For many years, home prices have increased in the mid-single digits. Recent moving prices increases in the double digits are a result of the confluence of extraordinary demand and chronically low supply. Prices are growing as a consequence of ample liquidity and very cheap borrowing rates.
To be sure, this is the most difficult real estate trend to swallow—so prepare yourself: Inventory levels have been quite low! To put this in context, inventories were approximately 30% lower in the first months of 2021 compared to the previous year. 2 Over the course of the year, there just weren’t enough properties for sale to match buyer demand.
Following that, we’ll look at house price trends. In the first few months of 2021, housing prices increased about 20% over the previous year, reaching a national median of $300,000–400,000! This should bring a great grin on your face, 4 Sellers! And purchasers, hold on tight—we have some suggestions for you as well.
Recently, the average mortgage interest rate (the fee charged by lenders as a proportion of the loan amount) has been rather low. Indeed, the average rate on a 15-year fixed-rate mortgage fell to 2.2 percent in January 2021, the lowest level in 30 years! 5 And now economists believe interest rates will remain around 3% in 2021, which is still rather low.
Did you know that internet firms now offer to purchase and sell your home on your behalf?
You inform organizations about the home you’re selling. They purchase it from you, invest money in it in order to resell it at a higher price, handle all the home processing details such as inspections, repairs, and showings, and then charge you roughly the same as an agent commission for selling costs—plus, some of these companies include an additional service fee (icing on their cake). They offer less bother, but dealing with a top-notch realtor who can sell your property for more money may result in less profit for you.
To begin, if you’re wanting to purchase a property but are unable to do so due to financial constraints, certain sellers, such as Divvy, offer rent-to-own agreements. In this arrangement, you agree to rent the property for a certain period of time (which might range from a few months to many years) before purchasing it. Rent-to-own has the advantage of bypassing the period required to save for a down payment and allowing you to move into a property quickly. Additionally, this means you are not required to qualify for a mortgage immediately.
The disadvantage of rent-to-own is that it increases your rent by allocating a portion of your monthly payment toward eventual homeownership. However, if you later decide not to purchase the property or if anything breaks your contract, all those additional payments will be a waste. Additionally, you may be obliged to do repairs and upkeep on your own even if you are renting! This choice puts you in a financially precarious position.
Is the housing market likely to implode in 2021 or 2022? What an impact a pandemic like Covid has on the property market, which continues to progress in the opposite direction of what one would anticipate during a recession! We are unlikely to witness another housing market meltdown on the scale of the 2008 housing bubble. We do anticipate a slowing of the pace during the following year. The economic conditions that contributed to that housing catastrophe were much different than they are now. This article will discuss how to think about a possible house market meltdown and the elements that influence real estate cycles.
The property market seemed to be collapsing early in the COVID-19 crisis. Rather than that, a housing boom has developed, with median house values increasing by an incredible 24% since the crisis started. The federal government-backed mortgages were immune from the foreclosure moratorium. It was essential in keeping the housing market afloat throughout the crisis.