There are several important factors you should consider before you refinance your mortgage this year, including current rates and your financial situation.
The Housing Market is picking up right where it left off in 2020 this year. In this article, we’ll go over the top 5 housing market trends that are happening in 2021.
In This Article:
- What Are The 5 Most Notable Housing Trends For 2021?
- Are Single-Family Homes Still In High Demand?
- Are Condos Making A Comeback?
- Will There Be Continued Demand For Luxury Homes And Second Homes Outside Major Cities?
- What Are The Predictions For Home Inventory And Mortgage Rates For The Remainder Of 2021?
There is no denying that last year was an exceptional one for the housing market, especially during the latter part of the year. And based on what analysts have seen thus far, many of the housing trends that we saw in 2020 will likely continue for most of this year, of course, with a few key changes and rising challenges.
That said, in order to help you prepare for successfully navigating the current 2021 market, there are a few housing trends and market predictions that you should be aware of—regardless of whether you are selling or purchasing a home this year.
1. Strong Single Family Sales and the Condo Market Comeback
As a whole, existing-home sales in January reached a seasonally adjusted annual rate of 6.69 million, much faster than expected, and sales were up 23.7 percent compared with last January. This high rate indicates that the resale market is still hot after home sales were up in the second half of the year. What’s more, January’s seasonally adjusted rate is one of the highest seen since 2006.
In addition to strong single-family sales, condo sales are definitely up this year. Sales of condos and co-ops increased 4.1 percent month over month and 28.8 percent year over year. Nonetheless, single family homes were far preferred over condos during the last year and still make up most of the real estate transactions as of February 2021. However, all signs point to the condo market making a comeback.
2. Luxury Leads And Second Homes Reimagined
Yet another trend to look out for this year is the continued growth of the luxury real estate market. Analysts expect the demand for exclusive residential properties or homes to continue throughout most of 2021. What’s more, many people are now rethinking their second homes, thanks to the increase in remote work. In fact, there has been an increasing trend to make second homes the permanent primary residences for those who did leave the city. And for others, swapping their primary residences for second homes or making them co-primary is also gaining more momentum and is likely here to stay at least for another year.
3. Leaving Cities And High-Tax Areas
Speaking of leaving the city, clearly remote working has pushed people out of cities and led to an increase in home buying in the suburbs. It is clear that suburban areas have seen higher home sales growth as compared to cities or urban areas, and many homebuyers have increased their willingness to commute.
Homebuyers are more likely to find traits that are increasingly desirable in the suburbs—larger houses for more time spent at home, dedicated office space, personal outdoor space, as well as proximity to beaches, trails, and open space. As a result, for the last 12 months, competitive real estate markets such as Seattle, Denver, Portland, Omaha, Lexington, Indianapolis, Oklahoma City, Sacramento, Oakland, and Tulsa boomed and are expected to continue to thrive in 2021, especially in their suburban areas.
Furthermore, many people are leaving high-tax areas as we speak. Thus, the effects of the ultra-affluent leaving high-tax areas will likely be felt throughout. This is especially true since many foretell that others will follow suit and take advantage of lower taxes since remote work opens up the potential to work from anywhere, and finances are tight for many people.
4. Inventory Remains Tight
A historically tight supply of existing homes for sale was the name of the game in 2020—a trend that shows little sign of slowing in 2021. Housing inventory set another record low in the first month of 2021 and is poised to continue at least for the next few months. Thanks to the increase in homebuyers, the increased demand for more living space, and unbelievable mortgage rates, the housing market has been somewhat competitive. But all signs indicate that inventory will be tight but not low in major sought-after areas throughout the country.
Moreover, despite the uptick in builder confidence and residential building permits toward the end of 2020, a significant number of new builds available for sale is more likely in the latter half of this year and in 2022. Of course, new houses will help to ease the need for more homes on the market, so the pressure to build sooner rather than later is going to be on for the rest of this year.
Mortgage Rates Are Going Up
Last but not least, rising rates could also weigh on sales and continue to rise as we head into Spring 2021. Earlier this year, mortgage rates began to increase from their all-time lows. But the good news is that rates are rising gradually as opposed to suddenly. At the moment, mortgage rates are hovering around or near 3 percent and are expected to remain low by historical standards until the middle of this year. That said, analysts say it is inevitable that, in the upcoming months, mortgage rates will be rising. So if you are considering a new home purchase or refinance, then now might be the best time to secure financing while rates remain low.
Ultimately, these are just a few major trends to keep in mind this year.
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Are you curious about mortgages, or are you ready to apply for one to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.