The housing market in 2021 is a perfect storm of good (very low mortgage rates), bad (high demand for property) and ugly (bidding wars and rapidly rising house prices).
If you ask “Should I buy a property in 2021?” The answer is difficult to predict. Buying a house in 2021 could be a fantastic idea or a financial nightmare.
Understanding the state of the housing market, the likely future path of interest rates, and all the pros and cons of buying in 2021 is essential before taking action.
The current state of the housing market
In 2021, the real estate market will be far from average. According to Realtor.com, the number of homes offered for sale has decreased by 31% compared to the same period in 2020.
At the same time, a recovering economy, historically low mortgage interest rates, and a sizable proportion of Millennials in their first few years of home buying are all contributing to real estate market demand. The combination of low stock and high demand results in a very competitive seller’s market, with asking prices increasing by double digits.
Home prices jumped 15.4% from May 2020 to May 2021 and are expected to rise another 3.4% the following year. Additionally, an estimate from the Federal Reserve Bank of St. Louis projects the national average home selling price to be $ 434,200 in the second quarter of 2021.
The Myrtle Beach real estate market has maintained record levels of growth. According to the Coastal Carolina Association of Realtors’ May 2021 real estate market report, closed sales of single-family homes jumped 52.3% in May of last year. The good thing is that new homes in Myrtle Beach are ready to sell even with this high demand. So it’s safe to say South Carolina is on the rise.
That being said, a knowledgeable real estate agent can help you determine the market value of homes in your area.
Factors that may have an impact on your investment
It is best to be aware of the following factors before investing in your dream home.
The FMHPI (Freddie Mac House Price Index) is a measure of average home price inflation in the United States. It shows that US house prices rose 11.3% in 2020, driven by strong housing demand and record lending rates. However, growth is forecast to slow to 4.4% in 2022. The current Freddie Mac home price index for the United States is 248.1 in July 2021.
The market is moving in favor of buyers, according to Realtor.com’s September 2021 National Housing Report. Homes continue to sell quickly and listing prices have gradually increased year over year. While the current listing inventory is historically low, the gap between this year and last year continues to narrow. In September, weather-related disruptions at various locations resulted in a drop in the number of newly listed homes year over year. The drop in newly listed residences this year is the first in five months.
After surpassing their peaks of growth, house prices are currently climbing to single digits. These market indicators suggest buyers will benefit as we approach the second half of this year. However, median list prices continue to decline in various metropolitan areas due to an increase in the number of low-cost homes. So, as new sellers enter the market at near normal levels, they may need to consider more competitive prices in the future, even if property values remain high.
In September 2021, the national median listing price for active listings was $ 380,000, an increase of 8.6% from the previous year and 20.6% from 2019. As of August through September, the national median house price for active listings was unchanged. Compared to last year, metropolitan areas saw an average price increase of 4.1%, which is slightly higher than the rate of 3.5% last month. The country’s largest metropolitan areas have experienced a slower rate of price growth than the rest of the country.
Median registration prices
While the increase in median listing prices has slowed, this does not indicate a collapse in the housing market. However, the proportion of homes with price reductions increased in September, surpassing the level of the previous year. The proportion of homes with price cuts rose 1.5 percentage points to 17.9%, just above the 17.3% recorded in August. However, the proportion of price cuts remains around 5% lower than in 2019. While this remains within usual levels, it may imply that some sellers are pricing more aggressively than in the year and a half. former.
The decline stops
Although the time to market has slowed, properties continue to buy quickly due to continued high demand. The length of time a typical ad is in the market begins to follow seasonal trends.
The average property was on the market for 43 days, down seven days from the previous year in September. As the number of newly listed properties increases, the dramatic inventory declines of previous months have slowed. As a result, the increase in listing prices slowed down.
By the end of 2021, real estate will continue to grow faster than average due to shortage and demand. Home prices, including struggling sales, rose 18.1% year-on-year in August 2021, surpassing the 45-year history of the CoreLogic Home Price Index. In addition, home prices rose 1.3% month over month in August 2021, compared to July 2021.
Idaho (32.2%) and Arizona recorded the largest year-over-year growth (29.5%). Prices in major cities / subways like Las Vegas, Los Angeles, San Diego, Denver, Houston and Chicago continued to rise in August, with Phoenix leading the way with 30.9% year-over-year. Home prices will increase 0.3% month over month from August to September 2021 and 2.2% year over year from August 2021 to August 2022, experts say.
As the housing market continues to grow and support the post-pandemic economy, these market pressures are having an unbalanced effect on access for some buyers. For example, 59% of customers interested in buying a home reported total income of at least six figures, compared to 10% of consumers interested in buying less than $ 50,000.
Although 2021 is a difficult year for potential homeowners, there are several compelling reasons to buy a home this year.
Low interest rates
According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage was only 2.8% as of July 29, 2021. As a result, homebuyers this year could take advantage of some of the rates. lowest mortgage interest ever, which can help make homeownership more reasonable.
Rates are increasing
All good things come to an end, even historically low interest rates. Unfortunately, many mortgage experts predict that interest rates will rise next year. And while it’s hard to predict how quickly or how quickly interest rates will climb, it’s not unrealistic to believe they will exceed 4% by the end of 2022.
House prices are rising
With prices expected to continue to rise the following year, buyers in 2021 will have the opportunity to accelerate their accumulation of equity.
Besides financial factors, there are several reasons to buy a property. For example, maybe your family is growing and you want more space. Maybe a move requires a move, or you choose to reside in a certain school district. Any of these things could make 2021 a great time to buy.
Suppose you don’t need a house right away, or you want choose the right house, taking more time. In this case, there are several compelling justifications for waiting until 2022 (or even later) to buy one.