The year 2020 brought a significant boom to the housing market across the board. With mortgage rates meeting 50-year record lows and an increase in relocations due to more remote work, sales were at all time highs. Simultaneously, home prices rose as buyer demand surged. Entering 2021 with so many changes on the horizon, what can we expect for the housing market in the US and Colorado specifically?
Inventory is expected to remain low. As the millennial generation enters into their 30’s there will likely be an increase in first-time home buyers. Relocation due to more remote workers is also predicted to continue. New home construction over the last decade has been low and, with the COVID-19 pandemic influencing labor and availability of building supplies, this trend was also sustained.
According to research from Zillow, home price appreciation will reach its fastest pace since the Great Recession, with price gains being driven by the fundamentals of supply and demand. Colorado home prices will be no exception here as Colorado continues to see more influx of residents from states all over the nation. Although slightly higher rates may seem to make ownership a little less appealing for some buyers, it is predicted that most of the country will continue to see ownership as an attractive financial bargain compared to renting. Danielle Hale, the chief economist at realtor.com reported to Forbes “we expect sales to grow 7% and prices to rise another 5.7% on top of 2020’s already high levels.”
In March of last year, the Federal Reserve took dramatic action by lowering interest rates in attempts to combat the pandemic and the expected economic fallout. As the rates are somewhat dependent on the state of the economy, it is tough to predict how long they will remain so low. Some experts believe rates will not see a change for much of the first half of the year but will eventually and inevitably increase. This making sooner, rather than later, the best time to lock in a pre approved interest rate.
A newer development to the real estate scene has been that of the many technological advances. There are now more ways to connect with agents and to learn more about a property quickly and easily through digital media. The pandemic has played its part in this growing trend with respect to social distancing and limitations on travel when it comes to buying out of state. 3D virtual home tours have facilitated a new way of house hunting that some have found to be more accessible for shoppers.
As we approach spring, many experts are predicting the seasons will have less impact on home sales this year. The demand is high and supply low. The housing market will continue to be hot. Sales are predicted to happen quickly and more often being over listing price. With high likelihood that the COVID-19 vaccinations will be more distributed, the economy is projected to reopen and grow. And, as more and more companies are deciding to on go remote work, there will be an increased number of buyers in the market. Without a doubt it is an incredible time to sell. Still, although it may be a more seller-friendly market, buyers will continue to have relatively lower interest rates and an eventually improving selection of homes.