Real Estate Predictions for 2021
From “Experts Predict What The Housing Market Will Be Like In 2021” by Brenda Richardson of Forbes.
Atlanta Metro Area
The National Association of REALTORS® identified the Atlanta – Sandy Springs area as one of the top 10 markets that has shown resilience during this pandemic period and that are expected to perform well in a post-COVID-19 environment. In identifying these markets, NAR considered a variety of indicators that it views to be influential to a metro area’s recovery and growth prospects in a post-pandemic environment in 2021-2022.
Overall, the predictions are positive for 2021. Millenials will contribute heavily to the buyer’s market. Interest rates will stay low. However, some experts caution that if job losses move up the income scale and if temporary job losses become permanent, we could see some buyers dropping out of the market until the economy gets better. Inventory is low and expected to remain low into 2021. The rental crisis could become a wild card.
National Predictions 2021
Selma Hepp, CoreLogic deputy chief economist:
- Interest rates will remain low
- First Time Home buyers will remain a strong force
- Older Millenials will contribute to the trade up market
- 2021 home sales activity expected to outpace 2020 levels.
Danielle Hale, realtor.com chief economist:
- We expect sales to grow 7 percent and prices to rise another 5.7 percent on top of 2020’s already high levels.
- Although supply is expected to lag, we do expect the declines to slow and potentially stop by the end of the year as sellers grow more comfortable with the market environment and new construction picks up.
- Single-family housing starts are expected to grow another 9 percent in 2021.
Robert Dietz, senior vice president and chief economist, National Association of Home Builders:
- With home builder confidence near record highs, we expect continued gains for single-family construction, albeit at a lower growth rate than in 2019.
- Residential construction continues to face limiting factors, including higher costs and longer delivery times for building materials, an ongoing labor skills shortage, and concerns over regulatory cost burdens.
Elana Knoller, Better.com chief product officer:
- We expect homeowners looking to refinance will do so sooner rather than later to take advantage of the low interest rate environment.
- While the Fed has indicated it doesn’t plan to hike rates soon, uncertainty over what the new administration might do in addition to broad availability of a Covid-19 vaccine, on top of what we hope is an improving economy, could bring an end to the ultra-low rates that we’ve seen this year.
- We will continue to see the growth of Millennial home buying regardless of the rate backdrop.
Todd Teta, chief product officer at ATTOM Data Solutions:
- We’re exiting 2020 with a number of dynamics that will more than likely keep this crazy housing market going.
- There is incredibly low inventory, with less than 500,000 homes for sale, mortgage rates are at 50-year lows, and there’s no sign yet of distressed sellers from the recession coming out.
Amy Kong, president of the Asian American Real Estate Association of America:
- Asian American households saw the biggest income growth of any racial or ethnic group in the United States over the past decade and a half — almost 8% compared to a 2.3% national average
- Although this is good news altogether, let’s not forget that there’s an income disparity within our community. While a lot of Asian American households are experiencing income growth, we’ve also been hit hard with the pandemic with small businesses closing and jobs lost due to Covid-19.
Jesse Vaughan, co-founder of Landed:
- Combined with record-low mortgage rates and forbearance programs, odds are the housing market will remain strong, but it is not a foregone conclusion. There is still significant risk to the downside if economic normalization coming out of the pandemic is botched or significantly delayed.
- The trend of Millennials moving to the suburbs and mid-size cities will continue after the pandemic subsides as it was in motion before Covid-19.
Daryl Fairweather, chief economist of Redfin:
- Rising prices for existing homes will increasingly drive more buyers to consider a new one. And because home buyers are now more eager to buy in suburban and rural areas where land is cheaper than in the cities, there will be more areas where homes can be built profitably. By the end of the year, the homeownership rate will rise above 69% for the first time since 2005.
David Howard, National Rental Home Council executive director:
Two things to watch are supply and affordability.
- Will there be enough homes for those that need them, and at what price? Covid-19 served to accelerate a move toward single-family home living that had started to take shape over the past few years.
- Much of this move is being led by Millennials, who are transitioning squarely into prime household formation years. However, that generation is also the least wealthy at a time when the cost of homeownership continues to climb.
Lawrence Yun, National Association of Realtors chief economist:
- Home sales surprised with a surge in the second half of 2020 and the momentum will carry into 2021.
- The interest rates will continue to be favorable since the Federal Reserve has indicated such.
- Demand could be stronger in the outlying suburbs and in more affordable metro markets, while the downtown locations could witness softer demand.
Tendayi Kapfidze, LendingTree chief economist:
- The housing market should continue to be a bright spot in 2021. Key to this will be mortgage rates that we expect to remain low as the Fed keeps up its security purchases.
- There are some downside risks to this outlook. The economy will be recovering as vaccines lead us down the path of normalcy, but the labor market could remain weak. A tepid labor market recovery would be accompanied by tepid income growth. Job losses are moving up the income scale and transitioning to permanent losses from temporary.
- Lending standards are likely to tighten further as the end of forbearance and foreclosure moratoriums are a wild card, potentially weighing on home prices in some areas.
- The rent crisis is another wild card and could bleed in the owner-occupied market via adding supply or affecting the financial markets.
Want more?….see the complete list below:
For a complete list of predictions see “Experts Predict What The Housing Market Will Be Like In 2021” by Brenda Richardson of Forbes.
Lee Ann is a member of Women’s Council of Realtors – Cobb and Cobb Association of Realtors. She is a top producer with Dorsey Alston Realtors specializing in the East Cobb market.
Lee Ann Wynns | East Cobb Realtor®
DORSEY ALSTON, REALTORS®
https://www.dorseyalston.com/agents/lee-ann-wynns/