The year 2020 has been a challenging year, especially in the economy. It has a major impact on the various markets you may now wonder how it will impact mortgage and real estate trends in 2021.
While the pandemic disrupted sales during what could have been the hottest season for home selling, the market is on an impressive rebound. Experts were noting the surge of home sales by the end of 2020 when the restrictions started easing down. People are making up for the losses of the previous year and are picking up on where they left off. But will this push on throughout 2021? Will the housing market keep up with the current economic climate? In case you are planning to buy or sell your home, here are some trends in the real estate market that you should know.
Slim Picks for Home Buyers
This is a huge challenge for home buyers. There is a low inventory of available homes listed for sale. Thus, there is a very slim option for buyers. Compared to the previous years, there seemed to be a shortage of homes for sale to meet the upcoming surge of buyer demand. Slim picks mean that buyers will have to look deeper and further for the best homes when they are out on house hunting. With these limitations, buyers are advised to expand their search and potentially sacrifice some of their “must-haves” or “wants” in a home. Options available will be expensive, thus go for something affordable in the best neighborhood and slowly upgrade over time. Additionally, it would help if you get preapproved for a mortgage before you go search for a home.
On the other hand, sellers will be having the time of their lives with offer letters flooding their mailbox. Homes for sale will be one of the relatively few on the list. Thus sellers can enjoy reviewing offers and picking out the one that suits them best.
Rising Home Prices
As soon as the economy opened up again in 2020, home prices started a steady increase. In October 2020, the prices grew by 16%, which is well over the national median of $300,000. This is good news for sellers, but buyers should hang tight. It is absolutely necessary for buyers at this time to find out how much you can really afford to buy a house. Be sure to stick to this budget despite pressure on competitors getting great homes on the market. Despite an expensive market, you can still feel confident about buying a new home if you save at least 20% for the downpayment and limit your monthly payment to 25% or less of your monthly take-home pay. Ideally, you can get a 15 year fixed rate conventional mortgage at this time to put everything you need within your budget.
As for sellers, a really good profit is at stake at this time, and it is great news because they will provide extra funds for buying a new home. It is best to find an experienced agent who knows the local market so you can get the best offers. Wait for the right offer. There will be some lowballers but if you are not in a hurry to sell, wait for the offer that will give the most profit.
Mortgage Interest Rates Are At An All-Time Low
The standard mortgage rates or the fee that lenders charges as a percentage in your home’s loan amount had reached rock bottom since the beginning of the pandemic, dropping to a whopping 2.31%, which is the lowest since experts began reporting these figures nearly three decades ago. The best part is, economists predict that these low-interest rates will continue to hover around a mere 3% in 2021.
Although interest rates are low right now, this gives home buyers a chance to find their dream home at low prices. Just make sure not to let the pressure or excitement of buying a house get to you when you aren’t ready. So, super low-interest rates on a property you can’t afford are still a bad deal. These low-interest rates mean more business for sellers since more buyers will be willing to buy your properties sooner than later.
Whether you are buying or selling a home, knowing the top trends in the real estate market for 2021 will give you a better advantage. Team up with a professional agent so that you can find the best offers in your areas of interest. Buyers will also appreciate lower mortgage rates at this time while sellers can get some of the best offers for the property they listed for sale.