Real estate has been one of the few bright spots in the economy during the pandemic. As the nation continues on it’s post-pandemic rebound, many real estate experts and economists believe that the housing bull market will continue. Of course, most would agree that the pace of real estate price appreciation will decelerate to some degree. With GDP running at approximately 99% of pre-pandemic levels, the economy is essentially back to running normally in most cases. In fact, due to the record amount of stimulus money, GDP will soon reach an all-time high. According to Lawrence Yun, chief economist for the National Association of REALTORS® (NAR), the U.S. economy will grow by 4.5% this year as mass vaccination continues and consumer spending increases throughout the year.
The outlook for housing prices
Historically low mortgage rates, high buyer demand, and a tight supply of homes for sale continue to feed into the current housing market frenzy. With this said, an increase in new home construction combined with progress with the vaccination program should provide much needed relief to the inventory shortage. A winding down of mortgage forbearance appears to be on the horizon as well. Moratoriums on foreclosures and evictions will end in June, with extended forbearance programs also close. Therefore, this should also contribute towards improving supply constraints.
Although recent home prices have appreciated by double-digits, the expectation is that prices will gain approximately 7% for the remainder of this year. As mortgage rates and home prices continue to increase throughout the year, this will unfortunately squeeze out many first-time home buyers. It is largely expected that the frenzied home buying environment with multiple offers will dissipate as the year goes on.
Summary
As with all real estate, it truly is all about location. With many Americans and even companies relocating to Florida, the continued housing demand throughout the Sunshine State should continue to outpace the rest of the country. In South Florida particularly, we are seeing unprecedented growth in the number of working-aged professionals moving to the area. As remote working environments continue to grow in popularity, South Florida will continue to experience tremendous growth. Moving forward, we are expecting to see increased demand in the higher-end and luxury real estate markets in South Florida.
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