As we embark on the final month of the 2020 year, it is time to start looking at the 2021 real estate market. Realtor.com recently came out with their real estate forecast for next year & we thought we’d discuss some of their predictions below. It should be noted that many of these predictions assume that the current COVID-19 pandemic will be largely under control by the second half of the year.
Realtor.com’s 2021 housing market forecast
- Mortgage Rates: Up to 3.4% by year end
- Existing Home Median Price Appreciation: +5.7%
- Existing Home Sales: +7.0%
- Single-Family Home Housing Starts: Up 9%
- Homeownership Rate: 65.9%
2021 predictions for Florida’s 9 metro markets
- Cape Coral-Fort Myers: 1.5% growth in sales, 4.3% increase in prices
- Deltona-Daytona Beach-Ormond Beach: 5.4% growth in sales, 6.3% increase in prices
- Jacksonville: 9.4% growth in sales, 5.0% increase in prices
- Lakeland-Winter Haven: 5.1% growth in sales, 4.9% increase in prices
- Miami-Fort Lauderdale-West Palm Beach: 3.7% growth in sales, 7.1% increase in prices
- North Port-Sarasota-Bradenton: 10.3% growth in sales, 6.6% increase in prices
- Orlando-Kissimmee-Sanford: 10.1% growth in sales, 5.8% increase in prices
- Palm Bay-Melbourne-Titusville: 11.6% growth in sales, 4.7% increase in prices
- Tampa-St. Petersburg-Clearwater: 8.7% growth in sales, 7.5% increase in prices
Moving forward, everything will hinge on controlling the pandemic. With this said, we expect that although buyers will still benefit from low mortgage interest rates, they should start to rise slowly. In addition, the expectation is that the inventory of homes for sale will remain tight but should improve. Therefore, the current buyer frenzy for homes should lighten some as well.
As for sellers, the market is expected to remain strong. Although prices are not expected to rise as aggressively as they have in 2020, we should still see some modest price appreciation. If sellers will also be subsequent buyers in the market, it is highly recommended that they have their next home lined up before listing.
Overall, millennials will continue to drive the market while Generation Z buyers will also enter the market in higher numbers. The oldest members of Generation Z will turn 24 in 2021 and their impact on the market will only continue to grow from here. Assuming that the current “work from home” environment will continue, suburban areas will remain in high demand. In South Florida, we expect more and more Americans to continue to moving south to paradise. The proportion of people working remotely will be a big factor in the number of Americans relocating south to Florida.