The 2020 housing market was surprisingly resilient, and even record-setting, despite other economic indicators of tumult.
On Thursday, the National Association of Realtors held its Real Estate Forecast Summit where a number of experts weighed in on what the market will look like next year.
Here are some of the predictions that emerged:
- Housing prices will continue to rise — Experts anticipate that prices will increase by 8.8% nationwide in 2021.
- Mortgage rates will increase — Although mortgage rates have regularly dropped to new record lows in 2020, they are expected to return to 3% for long-term mortgages next year.
- Single-family housing starts will increase — Housing starts are expected to average around 1.5 million per month next year and 1.59 million per month in 2022. Over 1.5 million houses broke ground in October.
- Alternative home investments will continue to gain in popularity— As informational sessions on online platforms like Zoom have become the norm, more people are interested in flipping houses, purchasing rental properties in lower-priced markets, and taking advantage of opportunities to pool small investments (as low as $100) together to buy houses as investment properties.
- Expect to see a shift in demand for retirement housing — In 2020, fewer people were interested in putting their parents in assisted living and other senior facilities because of the pandemic, so there is pent-up demand for retirement housing that is also depressing market supply as older people stay in their homes.
- A foreclosure crisis is unlikely...for now — Because of the myriad of forbearance programs available to homeowners, if there is a foreclosure crisis, it likely will not start in 2021 — but it could come in 2022.
- Multifamily construction starts may slow — Although multifamily construction has been relatively strong this year and is at 40-year highs, most of those projects were already in-progress, and it is more difficult to get multifamily deals underwritten now than it was at the beginning of the year.
The above predictions are either from a survey of more than 20 housing and economy experts, or from a Residential Outlook panel held during the Summit.
Thumbnail photo by Ted Eytan.
This article originally published at http://dc.urbanturf.com/articles/blog/nar-looks-into-the-crystal-ball-for-2021/17640
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