You may be "kicking yourself" that you didn't sell your home last year. According to the latest CoreLogic Home Price Insights Report, nationwide home values increased by 8.2% over the last twelve months. There were two reasons for this dramatic rise in values. The inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. As CoreLogic explained:
Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply.
Where will home values go in 2021?
Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high - fueled by record low interest rates, prices will continue to increase.
According to the National Association of Realtors (NAR), the current number of single-family homes for sale nationwide is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 with approximately 270,000 fewer homes for sale than there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1. As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2. Some households impacted financially by the pandemic will be forced to sell.
Low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. Today, we're starting 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason that demand is expected to remain high throughout 2021.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts.
There's still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of supply and demand mandates that home values in the country will continue to appreciate at least in the near future. There are some predictions that inventory will start to grow in the second half of 2021 as the vaccine becomes more accessible and the prohibitions against foreclosures and evictions begin to lift.
If you are in the DC metro area and want to find out what the value of your home is in today's market, just give the Lise Howe Group a call at 240-401-5577. Chances are that you will be very pleasantly surprised.