Key points:
- Nationwide home values increased by 8.2% over the last twelve months, but what can we expect from home values in 2021?
- Home price growth remained elevated throughout 2020, largely due to a record-low number of homes for sale and soaring buyer demand.
- These conditions are expected to hold steady through 2021, which should continue to bolster home values as the year progresses.
- Eager to take advantage of high homes values and rock-bottom-low interest rates? Contact Linda Craft & Team today to get started buying a home or selling your current home.
Home Values in 2021 Should Continue to Appreciate
Despite economic instability and a major global health crisis, 2020 was a surprisingly profitable year for real estate. Interest rates dropped lower than ever before, causing buyer demand to skyrocket. Meanwhile, the inventory of homes for sale plunged to record-breaking lows, creating a high-competition, fast-paced seller’s market. Combined, these two conditions have led to very strong home values.
But what will happen in the new year? Here’s what experts say is in store for home values in 2021.
Values will be driven by an imbalance of supply and demand
The value of a home is not a direct reflection of the health of the economy. In fact, prices and values are often determined by an imbalance of supply and demand. That is, if supply is low and demand high, values will likely increase.
The start of 2021 brought these same low-inventory high-demand conditions, keeping home values steadily climbing. However, where values go from here largely depends on whether buyer demand continues to climb and if inventory remains low.
Housing inventory is very low… but it may climb
According to the National Association of Realtors (NAR), the current number of single-family homes for sale is 1,080,000—which is approximately 370,000 lower than the number of homes for sale one year ago.
However, inventory is expected to rise; as the health crisis eases, more homeowners will feel comfortable listing. This should raise the inventory of homes for sale a bit, though numbers will likely remain relatively low.
Buyer demand will likely remain strong
For the past year, rock-bottom interest rates have been the predominant driving force behind soaring buyer demand. At the beginning of 2020, interest rates sat at 3.72%. Today, we’re almost a full percentage point lower.
Low interest rates mean thousands of dollars in savings for buyers, so an increase in demand is a logical reaction. Since interest rates are expected to stay low throughout the duration of 2021, buyer demand should remain high.
Home prices should to increase in 2021
Since inventory is expected to remain fairly low, and buyer demand should stay steady, most experts predict that home values will continue to increase in 2021, albeit at a more steady rate.
Just how much values will increase depends on who you ask—the National Association of Realtors foresees an increase of as much as 6%, while Fannie Mae predicts a climb of only 2.1%. On average, experts forecast a 3.9% increase in home values in 2021.
It’s an Ideal Time to Make a Move
Whether you’re buying a home or selling your current home, today’s market has more than a few advantages to offer. For home buyers, low interest rates mean thousands of dollars in savings. For sellers, rising home prices and high buyer demand mean a high return on investment and a speedy sale.
If you’re thinking about making a move in the Triangle, Linda Craft & Team is here to help. Contact us today at 919-235-0007 to learn more about how we can put our 350+ years of combined experience to work for your real estate goals.