Today’s Real Estate Market: Top 4 Trends In 2021
The real estate market continues to make news in 2021. Low mortgage rates, low housing supply, and high demand are still causing a hot real estate market. Subtle changes occurring in the real estate market could signal changing trends.
The median cost of a home today is just under $375,000, which is an increase of 11% higher than a year ago. In some cities, prices have jumped more than in other areas. In cities like Denver, the median cost of a home has been breaking records, with median home prices currently around $550,000, an increase of 22.5% from a year ago.
In other parts of the country, prices are only now catching up. The median price for homes for sale in Kansas City metro is around $250,000, an increase of 16.9% over a year ago. There are signs that prices are starting to level out, and the housing market could be cooling. This could be a trend or a temporary slow-down in the home-buying frenzy.
Mortgage rates will be the key trend in the real estate market. The Federal Reserve has been hinting at raising rates as early as 2022. In addition to raising rates, the Fed has said that they will start to taper the buying of mortgage-backed securities. Both of these factors could cause mortgage rates to rise.
The ongoing pandemic is also affecting mortgage rates and what the Federal Reserve might do. This could keep mortgage rates under 3% for the next several months. According to a Bankrate.com poll that asked experts about the trend in mortgage rates,
- 11% of the experts believe mortgage rates will rise
- 67% said they will stay the same
- 22% said they will go down
Supply and Demand
Supply is still low, and demand is still high, and this alone should keep prices from dropping. Even as home builders ramp up building, they have not been able to keep up with demand. The increased cost of building materials for the construction of homes and lumber shortages has slowed building.
Because of the pandemic, many chose not to sell their home, which further limited the supply. Another reason many are not selling at this time is they aren’t sure how easy it will be for them to find a new home.
Another factor of the pandemic has been the various foreclosure bans and foreclosure forbearance plans. As these plans start to end in the fall of 2021, we could see more homes on the market for sale, which would ease the low supply problem.
Another real estate trend that started during the pandemic has been suburban migration. Businesses found out that many of their employees could work from home without any decline in production. Many employers have decided to continue allowing remote workers even after the stay-at-home orders were lifted.
Remote workers no longer have to live in the city near their job have been moving to the suburbs. Some remote workers are even moving to more pleasant states and keep their jobs by working remotely.
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