In 2021 and the housing market, and for that matter the global health challenges we are all facing has been a year unlike any other. We have seen a global pandemic with business and social disruptions. A housing market that saw home prices rise from 15% to 20+%. We have had historically low interest rates. We have seen a shift from traditional work place settings to a flexible work environment, working remotely and a hybrid combination of all of the above. This was the year of zoom meetings versus face-to-face meetings. This was the second year of prolonged social distancing. We have seen supply chain issues which has affected virtually everything that we buy. So where are we headed in and beyond? To attempt to answer this question, we have looked at 4 key areas.
This is part of an on-going best in class series of helpful real estate articles by Nick Santoro and Joe Santoro of Personal Property Managers who service Pennsylvania and New Jersey and specialize in real estate, home content downsizing, property management, estate sales and home watch services. These tips and insights into the real estate market and looking into our crystal ball for and beyond are especially important in the economic environment we are in today, with the global economy turned upside down, and the need for extreme social distancing due to the Corona Virus. Additionally, during this challenging time in the Corona Virus and COVID-19 era, we help families that are unable travel or tend to their property needs by providing a true one-stop resource. We are focused on making life just a little easier for families during often difficult times. With Personal Property Managers, one call does it all.
Here are 4 key trends to look out for if you’re considering buying or selling property this year.
1. Mortgage rates will rise
Mortgage interest rates reached all-time lows in early 2021, with new 30-year fixed loans averaging less than 3 percent in some weeks. The key thing to know is that those record lows are almost certainly behind us.
Everything that we have seen points to mortgage rates moving up slightly to an average of about 3.5 percent. This means that refinancing opportunities for existing homeowners may dwindle in the new year, borrowing will still be affordable for most new buyers.
You may recall that prior to the pandemic, mortgage rates were hovering around 4 percent.
2. Smoother supply chains mean more home sale listings
Part of the reason for the hypercompetitive pandemic housing market was builders struggling to get materials as global supply chains slowed. That meant newly-built homes were slow to come on the market, which was compounded by hesitance on the part of existing homeowners to list during lockdowns.
Joe Santoro points out that we still have historically low inventory levels because things are selling faster than we can keep pace. With any luck, we are all hoping that the worst days of the pandemic are behind us, home inventories should grow in the year ahead.
Barring any major resurgence of the pandemic that could lead to closing of manufacturing plants, we expect supply chain issues to ease in , which will bring more new housing on the market. So, aside from newly-built homes, existing homeowners should feel more comfortable listing their properties if the pandemic remains relatively well-managed.
Nick Santoro found that a lot of people did not want to list during COVID. Nick says that if pandemic fears ease with vaccinations, these people will feel more comfortable to sell. This will translate into an increase in inventory.
3. Price stability and less homebuyer competition
The huge home selling price increases and bidding wars between buyers in 2021 should ebb this year, giving would-be buyers a better shot of making it to closing, while sellers should have a little less opportunity to get their adrenaline pumping.
As more listings hit the MLS the market should be a little gentler on buyers. Nick says that prices will start to moderate, Joe says that he does not think any industry can sustain double digit price increases year-over-year. That moderation may help offset rising mortgage rates, too. We feel that home prices should grow by around 5 percent in , down from 15-20 percent in 2021. Joe and Nick point out that prices rose by slightly less than 5 percent in the years prior to the pandemic, so a more normal pattern seems to be in the wings.
We feel that houses could spend a little more time on the market. Don’t necessarily expect to sell your house within 24 hours Nick says.
4. Shifting homebuyer preferences
Some pandemic trends are here to stay, however. Newly-flexible work arrangements for many are changing what people look for in a home. The opportunity to work from home will be a main driver. Because of this we feel that less-expensive areas will perform better than the more-expensive markets such as in major cities as we shift to working from home.
Working from home means buyers are looking for different layouts than they were before the pandemic. We have also seen that a lot of people were shifting away from the open floor concepts in homes because noise carries more easily between rooms without doors when a whole family is working from home.
Bottom line
This year should feel a little more normal to experienced real estate shoppers or noticeably calmer if you’ve only experienced the pandemic market so far.
Bottom line is that we advise our clients not to worry too much about what the experts are saying in any year though, and instead to focus on their own situation and needs.
If you have the down payment right now and you think that you are in the stage of your life where it is time for you to buy a home, then buy a home. The sooner you buy a home, the sooner you start reaping home equity gains. We will see higher interest rates in compared to 2021, and those rates are expected to rise again in 2023, so it is better to buy a home in .
At Personal Property Managers, we can help you prepare your home for sale, with our downsizing and clean out services. We can help you sell unwanted contents with our estate sale services. We can help with sprucing up your home so that it has the greatest appeal. This all translates into making your life just a little easier with our one-stop, single point of contact services. With Personal Property Managers, one call does it all.
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