This year’s housing market has been plagued with low inventory, rising home prices, and endless bidding wars, making it hard for some would-be homeowners to get their foot in the door. Will 2021 be any different? Or, will it be a good time to buy a house?
If you’ve been eyeing a home purchase but have sat out due to 2020’s competitive market (not to mention the other challenges the year has come with), you might be wondering just that.
Though there’s no crystal ball, a clearer picture is starting to emerge of what next year’s housing market may look like. Here’s what you need to know:
Interest rates should remain low.
The industry’s major players all expect mortgage rates to stay in the low 3% range come 2021. The Mortgage Bankers Association predicts the year will start off at a 3.1% average rate for 30-year loans, while Fannie Mae expects an even lower 2.8%. Freddie Mac projects a 3% average across the entire year.
Low rates like these can reduce the monthly payment that comes with buying a house, and they can also expand your budget, making it more affordable to buy a higher-priced home.
Home prices will probably keep rising.
It’s likely that home prices will continue their upward climb in 2021, though it looks like it may be at a slower pace than in previous years. MBA projects a 2.4% jump in prices (much better than last year’s 5.1%), while Freddie Mac expects an increase of 2.6%.
Fortunately, if prices do rise, low interest rates will help blunt the impact slightly, though it may mean buying a smaller home or dealing with a slightly higher monthly payment.
You may have more homes to choose from.
Prices might rise, but the upside is that you may have more homes to choose from. Housing starts are expected to increase steadily in 2021, meaning more new construction properties should hit the market as we head into the year. Both Fannie Mae and MBA predict the stronger single-family construction than we’ve seen in at least two years.
Is your employment and income situation stable?
The ongoing coronavirus crisis, and the stay-at-home orders resulting from it, have pushed the U.S. economy toward a recession. Some economists are now saying we’re already in a recession, and that it will probably get worse before it gets better.
Which brings us back to the question at hand: Should you wait until 2021 to buy a house?
To answer that question, you have to think about your current employment and income situation. Do you feel confident you can maintain your income, through whatever economic troubles might be brewing? If so, you can probably check this box and move on to the next question.
On the other hand, if you feel your future employment and income are vulnerable, you might be better off waiting until 2021 to buy a house. It’s rarely a good idea to take on new (and significant) debt at a time when your income is unpredictable.
Of course, if you’re paying cash for a house, this question becomes less important. But statistics show the vast majority of home buyers use mortgage loans to help finance their purchases. So this is a valid concern for a lot of people
Don’t forget: Housing is local.
At the end of the day, housing conditions vary by market, so if you’re wondering if 2021 is a good time to buy a house, make sure to talk to a local real estate expert in your area- like a beycome specialist! They’ll be able to fill you in on the conditions in your specific housing market.
Keep the climate in mind.
This isn’t a normal time to buy a house, and delays are almost inevitable.
It’s harder to shop for a house right now because some sellers, understandably, don’t want to open their homes for private tours. Inspections and appraisals have also been impacted by the virus.
At the end of the day, the virus may have changed the way that we buy homes, but buying during the coronavirus is still completely possible. Interested in getting 3% cash back on your purchase? Learn how beycome™️ can get you a commission refund on your home purchase.
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