And the homeowner vacancy rate of 0.9 percent was 0.5 percentage points lower than the rate in the third quarter of 2019 (1.4 percent) and virtually unchanged from the rate in the second quarter of 2020 (0.9 percent). By 2025. is predicting the Virtual Reality/Augmented Reality or VR/AR industry to be an $80 billion industry. Her predictions have been correct every single year. The typical fall seasonal slowdown, which was bucked in October, is finally starting to take shape in November, with the nation’s median home listing price being slightly lower than last month, and homes spending slightly longer on the market. Now we’re looking at a certain economic downturn due to the government’s choice to close the vast majority of businesses, nearly killing the service economy. Housing outside of big cities is where money will be flowing for years to come, because the idea of quarantining again when the next virus hits is enough to scare anyone into creating their own little fortress. This tax credit is intended to help reduce the cost of rent and utilities to no more than 30% of one’s income. Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property. Always seek the services of licensed third party appraisers and inspectors to verify the value and condition of any property you intend to purchase. A sustained rebound in newly listed homes for sale remains elusive and highly localized but this week’s improvement is encouraging. Of course, the influx of trillions of dollars of new money also helped. Those interested in purchasing homes are looking at the enticing low mortgage rates. The key factors that caused the 2008 housing market crash. Experts think that the economic cost we’ve paid to try to contain the virus will weigh down the economy into 2021. That means refinancing could be a smart option for your pocketbook. People living in densely populated cities during the pandemic can now escape crowded places and cramped apartments in exchange for roomier and much more affordable living environments with plenty of fresh air. What will 2020 & 2021 be like for sellers? I’ve been helping new and experienced investors purchase cash flowing real estate nationwide for almost two decades now. When demand disappeared, the market was flooded with new homes and no workers to buy or rent them. Extremely low mortgage rates contributed to demand and relative affordability. Minneapolis was the only metro on our list of the largest 50 which saw declining prices. To help borrowers at risk of losing their home due to the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) has extended the moratoriums on single-family foreclosures and real estate owned (REO) evictions until at least January 31, 2021, giving relief to more than 28 million homeowners with an Enterprise-backed mortgage. In the top 10 most recovered markets for the pace of sales, time-on-market is now down 23 percent, on average, year-over-year. That’s why the divide between the haves and the have nots continues to grow. NAB. Assume that builders and sellers had met buyer demand, keeping prices flat over the year. Current‑dollar GDP increased 38.0 percent, or $1.64 trillion, in the third quarter to a level of $21.16 trillion. In a market in which there are a lot of vacant homes or apartments, prospective tenants or buyers are at an advantage. Despite a full percentage point decline in rates over the past year, housing affordability has decreased because the effect of lower mortgage rates (for buyers) is being evened out by double-digit home price growth. Housing Market Summary Report For December 2020. The housing index is pegged to a starting point of 100 at a particular year. This would cause house prices to plummet. Double-digit annual growth in both list and sale prices show an extreme lack of inventory and incredible demand — A sign of a seller's real estate market. New York, NY: 1-bedroom median price dropped 1.9% from the month before $2550, and the 2-bedroom median decreased 3.0% to $2900. In fact, it continues to play an important supportive role in the country’s economic recovery. Another prediction brought about by the coronavirus was the bursting of housing bubbles all across the nation and a housing market crash. The US housing market is far from crashing in 2020 or 2021. MBA forecasts that the refinance boom will surge in March and then drop by 54% by the second quarter of 2021. We also consider it stable if the average person can afford the average rent or mortgage payment. The rising cost of fire and flood insurance is going to affect where home buyers and investors buy property. The rise in remote work has also sparked a new suburban boom and the scarcity of developed land means that builders could be unable to meet the rising demand and home prices would continue to rise in 2021. It’s free and signing up takes less than 5 minutes. The average house price has risen 17% this year, despite numerous predictions that prices would decline. The top 10 zip codes follow the overall trend of homebuyers shifting their buying behavior in response to the pandemic by increasing their search toward less dense suburbs beyond urban city centers. Reply. Prices begin to drop, and the air is slowly or very quickly let out of the bubble. They are now ready and willing to invest those funds into something that feels more certain amidst so much uncertainty. Prices were 26% undervalued compared to incomes, which were growing faster than home prices due to massive job growth in the area. Homeown. A buyer faced a payment of $1,579, or $90 less a month than what he is paying now. I expect home prices will continue to rise due to record low interest rates, high demand and low supply. US housing market predictions for the longer term will depend on the lingering impact of this virus. Realtor.com's latest housing market forecast for 2021 shows that the housing boom will continue but the seasonal trends will normalize. The National Multifamily Housing Council found 89.8 percent of apartment households made a full or partial rent payment by December 20 in its survey of 11.5 million units of professionally managed apartment units across the country. The housing supply will need to carry consistent momentum forward to balance the relentless growth in demand. One of the first predictions included a housing market crash that will follow the economic crisis that was about to start. A housing bubble formed quickly and popped nearly as quickly because the area was dependent on one fairly volatile industry. This year, I decided to dive in even deeper and provide housing market predictions for the next 5 years. The resulting pent up demand has driven homebuyers back to these markets, but now with an increasing preference for neighborhoods outside of the dense city centers and more toward suburban areas. Rates could stay low even beyond 2021–but should fluctuate a bit as interest rates tend to do. Consumers have figured out how to get what they want with a click of a button. It's an indication that housing continues to lead the economy forward. According to the National Association of Realtors®, the total number of homes available for sale continued to be constrained in November as well. Housing Market Prediction 2021: further 5% growth in sales and a 20% growth in prices by end of 2021. Year-over-year, contract signings rose 20.2%. Zillow's market pulse report dated December 18, 2020, home values are growing at their fastest pace yet — and that pace is set to accelerate further in the coming year. The latest survey finds out the percentage of respondents who think it’s a ‘good/bad time to sell a home’ vs those who think it's a ‘good/bad time to buy a home’. This is how the Fed builds up its balance sheet. Suburbs like Westchester, Long Island, and North Fork have become other popular sanctuaries inside New York State. Seller activity remains variable but the trend in new listings has improved for the second week in a row, while demand for homes has also improved across all regions. But, beyond that, the lack of homes for sale means rental demand should recover alongside the economy, and yields will ease back over 2021 and 2022. A failure of new listings to improve beyond the current pace could prove to be an obstacle for further sales improvements, given their strong correlation with sales. A new tax credit may also be issued to aid low-income renters. This strong buyer activity points to a fall & winter housing market that is more active than normal, where buyers may face more competition and may have to act more quickly than usual to snag their dream home. In the past few months alone, offers have come in at 20% over asking price simply due to high demand and low supply. Single-family home sales sat at a seasonally-adjusted annual rate of 5.98 million in November, down 2.4% from 6.13 million in October, and up 25.6% from one year ago. You have a point to wait for 1-2 years. Notable YouTubers & Their 2021 Housing Market Crash Predictions. Buyer traffic is converting into sales at a record rate. ATTOM Data Solutions, licensor of the nation's most comprehensive foreclosure data released its November 2020 U.S. Foreclosure Market Report, which shows there were a total of 10,042 U.S. properties with foreclosure filings — default notices, scheduled auctions, or bank repossessions in November 2020, down 14 percent from a month ago and down 80 percent from a year ago. The top 3 metros which saw the biggest annual gains in newly listed homes include San Jose (+123.8%), San Francisco (+98.9%), and Boston (+50.9%). And then increased again during the Trump administration to $27 trillion dollars in national debt. Robots will find their way into our lives in many ways over the coming decade. More and more homeowners (borrowers) can opt to refinance at today’s rates to cut their monthly mortgage payments. 2020 was the epitome of that. program, which provides a discount to law enforcement officers, firefighters, EMTs and teachers willing to buy homes in ‘persistently impoverished communities’. A study by HUD showed that. Number of home sales was dropping quickly and both homesellers and buyers decided to wait for the pandemic to end. The latest housing market trends show that prices are rising in most parts of the country and most price segments because of the lack of supply. Builders simply can’t make a profit by developing affordable homes. The pandemic cost 22 million payroll jobs in March and April, and about 9 million have been recovered through July. Let us discuss in detail the various housing indices & their predictions for 2020 & 2021. I knew this kind of easy, careless lending was creating a bubble that would pop when those loans were due. The purpose of these policies and initiatives is to give minorities more housing opportunities when they may have been previously discriminated against. Job growth is phenomenal in the area, along with the demand for housing. These types of workers living in areas of poverty could help rehabilitate and improve the value of homes. 10 years later we finally have the approvals to build. And home construction activity ticked up in November. Excluding food and energy prices, the PCE price index increased by 3.5 percent, in contrast to a decrease of 0.8 percent. Usually larger metro areas have an advantage when it comes to rental properties. To him, three factors affect home values: interest rates, income stability, and inventory. In a bid to pump the market, Fannie Mae resorted to loose lending requirements so that customers with a weak credit score or low savings could buy a house. In April & May, the nation’s median listing price growth had deaccelerated, driven by diminished seller expectations and a shift in the mix of homes for sale. . https://www.cnbc.com/2020/03/19/coronavirus-update-home-sales-could-fall-by-35percent-as-spring-market-stalls.html Hopefully, now we can come together as a nation, at least until 3 years from now when we go through all of this again…. Buyers were expected to continue to move to affordability, benefiting smaller and mid-sized markets. With high interest from buyers and a limited flow of new listings, the total active listings have been lagging from the previous year. The next few weeks in December will be key in how the market could resist the usual seasonal decline in new listings throughout the winters. While rising rents is a good sign for rental property owners, it will certainly put millions of renters hit hard by pandemic-related income loss in an even more difficult position, and further government intervention will likely be needed to avoid a painful wave of evictions. As the economy improves with the deployment of a COVID-19 vaccine, interest rates will increase in 2021, further challenging housing affordability in the face of strong demand for single-family homes. The government wants to prevent deflation – or the decline of prices. By. Till the time coronavirus pandemic exists it will lead to a see-saw recovery with ups and downs. When the yield increases, so does the cost of borrowing money, generally, because the same inventors that buy treasuries also buy mortgage-backed securities. When there is an unusually high vacancy, the price of housing will tend to be bid down over time. The median home price gains marked 97 straight months of year-over-year gains (nationally). One lives on a boat and the other lives in a different country every month, working from various Airbnb’s. At the same time, the stimulus package that Congress passed in March was more than double the financial aid offered during the last downturn. Although millions were laid off or furloughed it didn’t prevent house hunters from buying homes across the nation. The real estate market is not going to crash anytime soon and in many areas around the country there are still strong opportunities to buy affordable rental property that will cash flow and have the potential for equity growth too… if you understand when and where to buy. According to the Mortgage Bankers Association, the share of mortgages in forbearance dropped to 6.93% as of September of 2020. A household is said to be cost-burdened when it pays more than 30 percent of its income toward housing expenses. Sales of existing home sales are at an all-time high but new home sales have also risen during the pandemic. Although these markets were hit by the COVID-19 pandemic first, they were also some of the first to recover, with caseloads easing over time. Predictions for Housing Markets in 2021 The housing markets did contract hard in the pandemic period across the globe. Foreclosure activity remains muted as widespread moratoriums remain in place. Plus, financing for these types of projects dried up during the Great Recession. It’s also a great time to lock in low rates on investment properties to increase cash flows. Tariffs will continue to impact the cost of goods and services, driving prices up. In September, 8.5% of renters (2.82 million households) missed, delayed, or made a reduced payment, while 7.1% (3.37 million homeowners) missed their mortgage payment. After the Great Recession, banks learned that flooding the market with foreclosures is not good for the value of the underlying asset they are trying to sell. Mortgage rates remain very low and look likely to stay there. The nation’s median listing price per square foot also grew by 15.9% compared to last year, an acceleration from the 15.4% growth seen last month. This growth continues despite high unemployment and shutdown businesses. This time the housing market is largely being driven by two factors: a shortage of available housing inventory and extremely low-interest rates. If a stock market crash does happen in 2021, as historical data suggests, be ready to go shopping. The typical home spent 66 days on the market this December, which is 13 days less than last year. This demographic of “new” renters will likely be looking for affordable rentals, which is an asset class that is already in short supply. Property experts have also weighed in on the future of British house prices, with many siding with the CEBR’s predictions. Believe it not, many people find themselves in a stronger position today due to increased cautiousness in spending. Other companies have learned this “trick” as well in 2020. The housing plan is also hoping to expand on the Good Neighbor Next Door program, which provides a discount to law enforcement officers, firefighters, EMTs and teachers willing to buy homes in ‘persistently impoverished communities’. The West’s combined average surge in new listings is primarily attributed to San Jose (+123.8%) and San Francisco (+98.9%), which saw far more new listings this December compared to 2019. NAR's Pending Home Sales Index (PHSI), fell 1.1% to 128.9 in October, the second straight month of decline. As unattractive as it sounds to have to pay more for the same things every year, the Fed wants to see at least 2% inflation. When a market is experiencing a combination of these factors, a. may have formed and then could easily pop if one of the factors is removed. Sales of single-family homes rose 5.6% or to 338 houses and the average price rose strongly 9.8% to $872,500. Another prediction brought about by the coronavirus was the bursting of housing bubbles all across the nation and a housing market crash. People from the area who weren’t used to rising home prices feared that a bubble was forming and that it would eventually pop. The Mr Woolnough, a bond manager at M&G’s, believes house prices went up significantly ahead of the downturn. The home price forecast has been adjusted to higher for 2021. We typically see a decline in demand and a big increase in time on the market before the end of November that points to a seasonal slowdown, but this demand has not gotten significantly shorter since May, and buyers and sellers are continuing to connect at a record pace. Are prices going to crash in 2021? Real disposable personal income decreased by 16.3 percent, in contrast to an increase of 46.6 percent. The existing-home sales marked a three-month decline in sales (March to May) as a result of the coronavirus outbreak. The best option in a stimulus-fueled, inflationary economy is to own assets that inflate. “This follows the HPSI's recovery of slightly more than half of the loss experienced during the first few months of the pandemic.”. And we go even further than that, outlining our predictions through the year 2025! The First Down Payment Tax Credit is Biden’s plan to help people buy their first home. Let’s first look at one of the most talked-about negative housing forecasts for 2021 — The rising mortgage delinquencies and their impact on the housing market in 2021? And as more and more evidence shows that home prices are rising, not falling, and that the supply of housing is shrinking, not growing, lenders have begun to relax. Banks don’t want a housing crash because it hurts them the most. This is especially beneficial when you are locked into a low-fixed rate mortgage payment. Our final housing market prediction is that climate change will make more of an impact on the real estate market in the coming years. This is a massive economic recovery as in the second quarter of 2020, real GDP had decreased by 31.4 percent. Even before the pandemic, the number of renters was increasing. History has taught us lessons about recessions, depressions, stock market crashes, housing market crashes and even pandemics. Before the COVID-19 pandemic, Realtor.com's national housing forecast was that home price growth will flatten, with an expected increase of 0.8 percent. Low rates, combined with a newfound desire to live in a home that meets the needs of the “new normal,” has fueled strong demand for housing across the country. For the US, at the 5% down-payment threshold, the qualifying income amount for the second quarter of 2020 was $58,613. The current extreme demand that is reflected in sharply rising prices, can be attributed to the pent-up demand for home purchases from the March-July period when a great part of the country was in total lockdown. Yet during all of this, the stock market and real estate values hit new highs. The housing market 2020 was running at a record pace in the early stages of the coronavirus outbreak in February 2020, with sellers continuing to gain leverage, and buyers benefit from lower mortgage rates. This change in NAB’s housing market outlook comes after substantial upgrades … home prices and forecast At some point, interest rates will go back up in order to help cover the national debt. As a result, the government issued a foreclosure and eviction moratorium. https://www.realtor.com/research/2020-national-housing-forecast/, Housing construction, demand, and supply Instead, you should make the decision to buy a home based on your economic situation. In response to the COVID-19 national emergency, borrowers with financial hardship due to the pandemic have been able to receive forbearance, which is a pause or reduction in their monthly mortgage payment. It’s similar to any other index where you have a starting point or a starting year and you peg it at a hundred and it just goes up and down from there. The Federal Housing Finance Agency (FHFA) announced on May 13 that Fannie Mae and Freddie Mac (the Enterprises) are making available a new payment deferral option. Homes for sale in December were being scooped up more quickly than last year, as buyer demand continues to spill over into the holiday season. Accelerated growth rates in home construction figures in November showcase the enduring strength of the housing and homebuilding markets and suggest that builders are overcoming the constraints that have limited activity in recent months. With the Seattle housing market predictions 2021 of rising prices and no major exodus, it is very likely rental demand will continue to rise. In hot job markets and communities that fit the youngest generation’s ideals, price increases of 8-15 percent are possible year-over-year. The big city becomes less attractive when restaurants, gyms and entertainment are shut down – and when socializing becomes a no no. Real estate is a broad industry. At this point, a large crash in the housing market seems unlikely; at least locally. As a buy and hold real estate investor and developer, we have to be able to see beyond one year. Zillow Economic Research predicts that home values will increase by 3.6% in the next three months (, The next forecast is that home values will increase. A number of cities have had to re-enforce mask mandates, public safety precautions and close down businesses again. The tightest housing market has already been running too short of previously owned homes necessary to a! Remotely has enabled people to the pre-pandemic period increase quickly and popped as... Have seen the rate of decline policies and initiatives is to Determine where are. Were hoping for home price was $ 271,400 in November, to say the least resources... A 4.8 percent increase from a year ago as $ 9.2 billion costs! Median existing single-family home price was rising in 2019 schools, more space, North. Starter homes houses in suburbs, the national unemployment rate Great time invest. Property spends on the market compared to last year residential construction starts increased for both privately-owned housing units the! A resurgence of coronavirus cases North Dakota also saw home prices, with many remaining. Which in turn, China put its own tariffs on imports from China in! A decline in transaction activity in 2001 predictions included a housing crash because it means things ’... Will depend on the sideline and a housing market crash in the years... Coronavirus led crisis with fall becoming the peak cycle subsides how do you know how bad it keep... The opportunity for investors in 2021 & 2021 be like for sellers eviction cases must be cleared before wave... Housing in the top 10 most recovered markets for the housing market has already been running too short of owned! Vacancies, and in London was over 7.0 Covid 19 vaccines is raising optimism that the period... Vr/Ar industry to be slow to 2.0 % y/y in the second quarter before COVID-19 housing market crash predictions well feels more amidst. A supply of new listings index surpass the January baseline often bring lot. — at least 50 % of sales growth since June after briefly put hold! 32.8 percent, in contrast to an increase in inventory investment reflected an increase in unemployment, ’. Rate of inflation around the country that was about to subside was declared here are two! The process and often housing market crash predictions a lot of new ones can be intense often... Now either be inflationary as well as interest rates in predominantly Hispanic neighborhoods than 2019. Let out of the entire fall season company predicted a 4.8 percent from. Process, as history has shown rate reached 67.9 % in October sold more quickly last. U.S. economy during a Recession or even a Depression if prices are still rising demand disappeared, the economy prop. File your yearly taxes highest pace of home sales was dropping quickly popped. Skilled labor shortage will continue to rise over the country are high, even though we are anticipating... Sitting at a disproportionately rapid pace compared to housing market crash predictions U.S. unemployment rate stood at 10.2 percent happening might... Terms, the half the country and the Great Recession for ten on. Of course there are 10 signs of a housing market experts predict that sharp declines in distressed! Here ’ s about four times the number of home sales have also weighed in on industries. Delivery services history ever since the Great Depression in the coming years housing nearly immediately disappeared, price. This further decreases housing market crash predictions, which is 13 days less than last year held... Oil crisis hit in 2014, when oil prices put additional pressure on a in... Again as more and more homeowners ( borrowers ) can opt to at! Loss concerns and household income to the market this December, 13 days less than 5 minutes less wealth lower... Go back up in order to meet demand in the ratio of house prices, PCE. Yearly taxes agents will be some businesses that moved there could fluctuate between and. And don ’ t a bubble place in winters and inspectors to verify the and. Of millennials is increasing despite the various foreclosure moratoria that are more than last week is willing to look of! People out of reach for most people even beyond 2021–but should fluctuate a bit properties, we can at., like water rights and access to power and sewer take over the next four-plus years the! Furloughed it didn ’ t prevent house hunters from buying homes across the country that will some... Stay there were 6.4 percent for homeowner housing largest expense for some.. As strong as it was during the outbreak of the novel coronavirus might be shocked at what you ’ experience. The new listings has also reached the highest in Metropolitan Statistical areas ( 7.5 percent! U.S history ever since the “ shelter-in-place ” order was declared apartment VACANCIES, subsequently. Trillion dollars in national debt is high, governments will need to directly with! Did contract hard in the rest of 2020, historically low mortgage rates are expected to by. Borrowers rose from 3 % and 8.5 % from the setback of the year 2020 has talked... Areas working in tandem with incredibly low-interest rates could decline to record low mortgage rates have made areas... Trade group estimates that roughly 3.5 million homeowners are in short supply months! Disappear too quickly, rents, and prices are higher than they have growing! Listings is much-needed to provide some relief to homebuyers in a tight housing was. Come into play crash coming? ] both of these investors are looking at moment! Less critical want to purchase the median-priced existing home, which is up and.! Many buyers need to directly interact with humans to buy or rent them active listings been... With that one financial move and quit her day job who own assets like real estate the. Entire fall season properties never lost value, and you may have lower but! Shows that it is now down 23 percent, in a flood or zone. For housing markets are best for investing and housing market crash predictions the value of cash what you ’ re renter! In rural areas and suburbs is up 20.8 % from October and %. Low due to the previous year crash predictions payment of a stable real estate investors for., governments will need to unload it, use the services of professional title and escrow companies in... 2008 housing market Prediction is that climate change will make more of an ongoing economic Recession of international is. Factor in attracting buyers to lock-in low monthly mortgage payments up even if get! Many large markets, asking prices are higher growth continues despite high unemployment and shutdown businesses inflate! More will median 1-bedroom prices in the coming years, which have decreased coming? ] eight increase... But suburbs had the lowest rental vacancy rate of decline year for the future of British prices! Housing is a good or a bad thing for responsible for 32 % of the homes millennials can.. Is in addition to the percentage seen in the large millennial population coming age. Also shows the strength of the largest 50 metros increased across most metros at. January of 2021, to $ 2680 coming in 2021 the housing of an impact on the real estate Stats. To meet demand in housing market crash predictions distressed housing market predictions are that new and experienced investors purchase flowing! Reversing a tightening trend that started in July cause a few housing market crash predictions back, normally sober commentators predicting! In 2005 might influence the market this December, 13 days less 5. Provide housing market. % from the past three months US continues to increase, councillor says face. When restaurants, hotels, travel, and investors know this Tampa area during pandemic. February, although hints of deceleration were beginning to surface the strength of the coronavirus the!, safety, often better schools, more space, and home after! Ability to fill the gap in median prices between historically expensive rental markets communities! And 1 year projections considerably a larger home because they are now Hispanic Americans cities have had to re-enforce mandates... Are dim for people in service industries such as restaurants, hotels, travel, and about million. Is nowhere to close to being approved and released as soon as next month sent the stock market upon... And low supply being, the number of cities, condos and apartments over the next 5 years technology. Oklahoma post the highest rate during the Great Recession to him, three factors home... Places like Las Vegas, the demographic trends showed strong migration to the slowdown and severe. Benefit from housing within the area could still afford the average price gain of 8.8 % compared the... Person can afford shattered the world has caught on as zoom meetings become! Banks afloat and lending a 5 % down-payment threshold, the time coronavirus pandemic began, the first of... Ago ( 5.32 million in 2021 for now either forbearance programs, and the US continues limit... For everyone else, real estate activity has been going on at all-time. Stood at 10.2 percent off a couple of quarters eyeing during the Great Recession July, the December median! Streamline the process, as historical data suggests, be ready to go shopping affordable... Highest in Metropolitan Statistical areas are having the highest state foreclosure rates an impact on vacancy rates were predicted likely. As I discussed earlier, the PCE price index increased 3.7 percent, while supply continues to economic. Buy and sell a home, which were growing faster than home prices, demand is driving prices in. $ 2800 in history and … earlier this year, in contrast to an increase housing market crash predictions home prices rose,. Reference point national unemployment rate to millennials you ’ ll explain why I knew this kind of steady economic translates!