A buyer’s market typically means lower demand for housing while there is a glut of inventory of homes for sale. On the other hand, a seller’s market is marked by high levels of competition and rising home prices. In most cases, you’ll have a harder (and more expensive) time finding a home. Needless to say, the recent few years have been a seller’s market, making it particularly challenging for buyers. Moving into 2021, we fully expect these conditions to remain the same.
Buyer relief on the horizon
It is not all doom and gloom for buyers, however. While the persistent tight inventory of homes for sale will remain for some time, we do not expect to see home price appreciation to match what was seen in 2020. Overall, home prices increased by approximately 5.5% in 2020. According to Freddie Mac, home prices are expected to increase by 2.6% in 2021.
Additional relief for buyers should also come in the form of continued low mortgage interest rates. Fortunately, these low interest rates should help to offset any rising home prices. Most economists project that interest rates will stay in the high-2% to low-3% range. Fannie Mae actually predicts mortgage interest rates to average 2.8% rate throughout the entire year.
Although this year will likely present some similar challenges for buyers, there are some additional factors that could help ease the tight inventory challenges. For example, the oldest millennials will turn 40 years old during 2021. With this said, many of these buyers will likely become trade-up home buyers as they have likely seen substantial equity gains. Naturally, this will most likely result in most of these buyers also having to sell their homes. At the same time, Generation Z buyers (ages 24 and younger) may begin to enter the home buying market. In addition, we should continue to see an increase in homebuilding as well. Therefore, we should see a continued active real estate market for the foreseeable future.
Are you considering a home purchase in South Florida in 2021? If so, it is important to have a strategy in place. We can help. Contact Live South Florida Realty, Inc. today!