Here are my thoughts on what to expect from our 2021 real estate market.
Let’s talk about some 2021 market predictions, shall we? As I’ve warned you before, my crystal ball is very, very murky (you can see what I mean at 0:45 in the video above). Though my predictions are based on economic principles, historical trends, and fresh market data, nothing can be said about the future with 100% certainty. Here’s what we know:
Interest rates and inventory are both exceptionally low and demand is sky-high. As a result, prices keep rising. As long as those factors are present, then we’ll likely see our market stay relatively the same. That’s good news, but we still don’t know what twists and turns could change the composition of our market. If prices were to start dropping, we’d only know what factors were responsible six months after the fact.
“Will we see some foreclosures? Yes. Will that drive our prices off the cliff? No, I don’t think so.”
Will more homes come onto the market soon? Will interest rates start going up? How long can our market keep up like this? Should we expect a wave of foreclosures soon? Those are just some of the questions I’m fielding on a daily basis, but it’s important that I address that last one. No, I don’t believe we’ll see a sudden market crash comparable to the one we experienced in 2008 and 2009.
Whereas billions of dollars in cash-out refinances throughout the mid-2000s left U.S. homeowners vulnerable in 2008, homeowners today have much more equity. Even if everything turned upside down tomorrow, sellers could simply use their strong equity positions to head to market. We’d see an uptick in inventory, but it wouldn’t be primarily via foreclosures. Will we see some foreclosures? Yes. Will that drive our prices off the cliff? No, I don’t think so.
Buyers are hurting for more inventory right now, and builders are doing their best to keep up with demand. Still, there’s just not enough supply to go around, so prices are rising. To get their offers accepted, some buyers are waiving their appraisal contingencies. That can cause its own set of issues. (Stay tuned; I’ll share more on that in a coming video).
COVID-19 and widespread social unrest defined 2020, but neither have anything to do with the real estate market directly. There was no way to account for them in our predictions. Now, after 12 full months of living in the pandemic, we’re seeing some hopeful signs. With a possible vaccine surge on the horizon, more sellers might feel comfortable putting their homes on the market. If anybody says they know exactly what’s going to happen this year, just smile and nod—they don’t know more than anyone else.
If you have questions about what’s happening right now in our market or need help buying or selling a home, please pick up the phone and give me a ring. I’m happy to be a real estate resource for you. Be safe, and enjoy the spring sunshine!