COVID-19 shook the entire nation early in 2020. The U.S. economy took a major hit thanks to lockdowns, with more than 40 million Americans filing for unemployment because of the pandemic. Now, economy experts are looking at the future of the housing market with conflicting views. While the house market forecast for 2021 is full of uncertainty, there are a few predictions to consider as this year comes to a close.House Buying Trends for 2021
Early this year, the real estate industry came to a screeching halt as officials put lockdown orders into place. Sellers took their homes off the market, and those who planned on buying homes in the spring held off on making offers. This changed as summer began and lockdowns came to an end. People started buying up property again, and now sales are booming. This might indicate that the industry is bouncing back — for now.
That said, there are currently several factors influencing the market, including:
Some experts predict that home prices will decline in 2021 because so many people have reported financial struggles due to COVID-19. While government officials have initiated strategies to protect workers from going into further debt and losing their homes, the long-term economic repercussions of the virus could result in a foreclosure spike. A sudden rush of foreclosures on the market without enough demand to offset it would lead to a drop in home prices.
While it's still unclear what the long-term effects will be of the current economy on the housing market, some reports expect there to be ups and downs throughout 2020 and into 2021. According to Realtor.com, overall housing prices will increase by just 1.1% for 2020. Sales could remain inconsistent throughout next year until concerns about COVID-19 start to wane.How the Economy Affects Mortgage Lenders
The current real estate situation also affects lenders in the industry. The good news is that mortgage rates are dropping. While the average mortgage rate was around 4% in 2019, that percentage fell to about 3.2% in 2020. Predictions expect the number to drop below 3% and remain there throughout 2021.
These uncertain times may also impact the way lenders choose mortgage candidates. We may continue to see larger down payment requirements and stricter credit score criteria as lenders work to minimize foreclosure risks. This could also reduce the number of people buying homes, as they'll need to save up more cash and build up a credit history before taking out loans.
While housing prices are up right now, only time will tell how COVID-19 and the current economic challenges affect the industry in the coming year. The housing market trends reflect the uneven road ahead while the nation tries to recover from this health and financial crisis.Contact SK Builders
Why let concerns about the house market forecast for 2021 keep you from finding the ideal home? There are still plenty of options available to choose from. If you're a new buyer, we'll be glad to help you find a piece of property that feels like home from the moment you walk in the door. You can contact SK Builders today for more information.