This Spring promises to be an especially chaotic season for homebuyers as mortgage rates continue to remain volatile, housing supply remains low, and real estate trends resume their major shift. The trends that prevailed throughout 2020 are still in place and will continue to keep the housing market ultra-competitive for homebuyers.
As a homebuyer, being prepared for the competition and knowing what to expect will help expedite a close. Let’s examine some of the trends for the 2021 Spring season:
Buying Demand Outweighs Available Homes
The combination of lower interest rates and desire for stability has been leading to more buyers. Currently, the housing market is short about three million available homes, and it could take a number of years for new construction and existing home sales to catch up. This means the low supply will likely extend beyond quarter two of this year.
Homeowners have been holding off on selling as they’re reluctant to open their homes to real estate agents and prospective buyers for safety reasons as well as growing concern about the competitive nature of the housing market for their next acquisition. The increase in vaccinations and a promise of a return to normalcy, there is hope in changing this fear mentality and adopting more houses to the market.
Home Prices Continue to Rise
The already-high home prices are continuing to climb. Prices of homes for sale are growing overall, but slower in metro areas. Ultra low mortgage rates combined with drastically reduced inventory are keeping buyer demand strong.
Mortgage Rates Will Gradually Ascend
One of the key drivers for the drastic rise in home prices has been low mortgage rates. The lower the rates, the lower the buyer’s monthly mortgage payment, the more they can afford. This has enabled many buyers to afford more expensive homes without having to shell out more for them every month.
After bottoming out early this year, mortgage rates have been on a modest upward trajectory for the last few months – a trend that is likely to stick around for a while.
Although rates are climbing, they’re still extremely low by historical standards, so the higher rates aren’t expected to have a huge impact on mortgage affordability for now.
The Shift Out of Dense Cities Will Remain Popular
Throughout 2020, moving trends showed that most people left the densest parts of metropolitan areas for places nearby where they could afford a little extra space. With more people working remotely, there is an increased exodus to more spacious, less expensive areas; homebuyers want more space so they can live, work, study, and play more comfortably. Smaller suburban and outlying markets continue to rise in demand as affordability remains front and center. First time homebuyers remain attracted to home ownership to invest in their families, communities, and financial well being. As remote work arrangements continue to stretch in 2021 and beyond, housing tastes will be shifting for prospective buyers.
If you have further questions about mortgage rates or financing, please reach out to us at (760) 930-0569 and one of our Loan Originators will be happy to assist you.