Although 2020 has been an incredibly challenging year, housing turned out to be a bright spot. Despite the impact of the coronavirus COVID-19 pandemic, home ownership rates rose to 67.4% in the third quarter, up from 64.8% in the same period in 2019.
Importantly, the fundamentals are in place for a continued strong housing market in 2021, particularly since it is expected that mortgage rates will remain around 3%. Here are a few more of predictions for real estate in the coming 2021 year.
Home prices will rise. With demand exceeding supply, the law of supply and demand will drive home prices higher, with 5% to 6% increases predicted on average.
Affordability will remain mostly positive. Low mortgage rates will offset rising home prices, thereby increasing the number of households which can afford to buy a home.
Inventory challenges will continue. While builders are expected to construct homes at a faster pace in 2021, there will still be a gap between demand and supply for new and existing homes.
Increased teleworking will influence housing. People will continue to work from home, which will affect where they will be shopping for homes, and what they will be looking for in those properties.
Vacation home markets will stay hot. In 2020, homeowners with rising equity and investors with high stock market profits drove a spike in demand for homes in coastal vacation markets, which will continue in 2021.
Technology remains critical. Virtual tours, remote closings, and video conferencing kept real estate active in 2020, and virtual buying and selling will continue in 2021.
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