After a year of many broken records, there remains much uncertainty about the 2021 housing market. Realtor.com says prospective homebuyers will not be given a break in terms of home prices or mortgage rates. Instead, expect home prices to rise through next year, but at a much less aggressive rate. Prices are predicted to advance by 5.7% next year as for-sale inventory becomes more robust, which may happen in the second half of 2021. Mortgage rates are expected to begin an upward climb throughout the next year, eventually reaching 3.4%.
Mortgage rates are currently at an all-time low of just 2.72% for 30-year fixed-rate loans in the week ending Nov. 25, according to Freddie Mac. While a roughly 70 basis point rise isn't dramatic, it will make those monthly mortgage payments even pricier. This has the potential to price out some buyers or force others to purchase cheaper abodes in less desirable locations.
However, even higher prices, and therefore higher required down payments, aren't likely to keep the hordes of determined buyers at bay.
Sales of existing homes (i.e., previously lived in abodes) are projected to increase 7% in 2021. That's coming as folks stuck inside their homes for months on end are seeking larger residences or ones with different features. Younger millennials are competing with older members of Generation Z for starter homes, and baby boomers are downsizing. Many apartment dwellers are also seeking homes on their own.
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