Housing Market 2021

Housing Market 2021

After the economic distress of 2020, many people are wondering exactly what the housing market is going to do in 2021. Due to the pandemic, many people lost their jobs and struggled to pay their mortgages as the economy suffered. However, 2021 holds a lot of hope for the housing market and for the economy as we are finally coming out of the pandemic.

Want to know more news about the housing market in 2021, both at large and in Virginia? Just read on for some of the biggest predictions.

Sellers’ Market

The housing market in 2021 will continue to be a sellers’ market, a scenario in which there are more buyers than homes for sale. You can expect houses to move quickly once they’re on the market. Home sales should continue to go up along with home pricing. Prospective homebuyers will need to act fast if they find a house that meets their needs.

However, as the year moves onward, there should be a shift in supply and demand. Supply is expected to increase somewhere near the middle of the year. More houses will be listed, creating less demand. This scenario should also bring about a cost reduction.

Millennials Enter the Market

One of the biggest changes we’ll see in the housing market for 2021 is that many millennials will be coming of age to purchase their first homes. Many millennials will enter the market. As the vaccine is circulating, the economy is slowly getting stronger, and people are preparing to go back to a normal life, many are deciding to move to new homes.

More people than ever are now working from home, giving them the freedom to live wherever they want. Millennials are no longer tied to cities and forced to rent apartments to stay near their jobs.

Now, many are realizing that they can move to smaller cities and can buy homes for similar prices to what they’re paying in rent. Forecasts expect millennials to comprise a large percentage of the housing market.

New Home Construction

New home construction is on the rise. Even though building prices and the costs of materials are surging, contractors will continue to start new projects. Many people are willing to pay more for a home, as it may be their only option since houses are getting snapped up almost as soon as they’re listed.

Contractors are taking advantage of the lack of supply. They’re able to build houses to meet the demand and reap the benefits. You can expect to see more new construction on the market, but there may be an excess if the market slows down later in the year.

A Return to Spending

There was a lot of uncertainty in 2020. People didn’t know how long the pandemic would last and couldn’t predict its effect on their jobs and the economy. In the early months of the pandemic, many people were reluctant to buy a house. They preferred to save their money until they felt their future was secure.

As 2020 drew to close, people began to see a light at the end of the tunnel. Vaccinations were announced, heralding the end of the pandemic, and the economy slowly started to move back up. People were more willing to spend money, and with mortgage rates at record lows, they brought the housing market back to life.

Mortgage Rates

Mortgage rates continued to hit all-time lows in 2020, making it possible for more people than ever to get a home loan. Many fear that in 2021, as the economy gets stronger, employment rates climb, and things start to level out, that interest rates will jump back up to their pre-pandemic rates or higher. There are also fears that the new president and his administration may raise interest rates.

However, all forecasts indicate that interest rates will continue to remain low. The Federal Reserve seems to recognize that interest rates must remain low in order for the economy to bounce back. Since the cost of housing is currently so high, high interest rates would push people out of their budget to buy a house. Interest rates have to remain low or the market may crash.

Hottest Areas for Real Estate

People are moving out of the city more and more. Home buyers are starting to realize that if they’re willing to move to smaller cities and towns, they can own much larger houses with outdoor spaces, often for lower costs than paying to rent.

Small cities with bustling a cultural lifestyle are expected to draw in younger buyers. These buyers are looking for the balance between the advantages of living in a larger city while also getting more bang for their buck when it comes to buying property.

Will the Market Crash?

While many fear that the market will crash in 2021, much as it did in 2007, most forecasters feel that it’s much more stable this time. There are many factors and failsafes in place to prevent another crash. In particular, lenders are much more discerning about who is allowed to borrow money. Additionally, there are forbearance measures in place to help people who’ve suffered a lack of income due to the pandemic.

Housing Market in Virginia

As with the rest of the country, Virginia has seen a surge of home sales over the past year. Low interest rates and a rising number of homebuyers have driven up housing costs. Even though employment is still lower than it was in 2019, people are still buying houses.

You can also expect to see more new construction in Virginia as contractors work to keep up with the demand. The housing market in Virginia expected to remain strong throughout 2021.

Final Thoughts

For the housing market in 2021, it looks like the market will continue to remain strong. Even though it seems supply may increase later in the year, the demand will also increase as millennials enter homebuying age.

Costs are likely to rise, but mortgage rates are expected to remain low. As we move out of the pandemic and our economy starts to stabilize, the real estate market is likely to continue going strong. 

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