Will Home Prices Keep Rising?
That is the magic question! (Along with 'what are interest rates going to do?')
I may not have the magic crystal ball but I do have statistics, analysis, and educated guessing on my side!
It is true that being a homebuyer this year is very challenging and a lot of people are asking themselves if they should continue to rent or go ahead and make the move to buy. In my opinion, that depends a lot on both your needs/wants in a home and where you live.
You may be wanting more space for home offices, play areas for kids, and more. You may not have to be close to work, which is one reason why there’s a current exodus out of expensive cities like New York City and San Francisco to suburbs or smaller towns. Another reason is cost.
According to HomebuyingInstitute.com, home prices will almost certainly continue to rise through 2021, primarily due to limited supply/inventory and strong buyer demand. Interestingly, the pandemic appeared to fuel the housing market. Realtor.com reported that median home listing prices rose 15.4 percent between January 2020 and January 2021. And, in the 50 largest U.S. metros homes sold 12 days faster in 2021. At the same time, the number of homes for sale in January was down 42.6% year over year. That means 443,000 fewer homes for sale which only exacerbates demand.
Mortgage interest rates hit record lows in January 2021, with nowhere to go but stay the same or go up. Thus, with limited homes for sale and low interest rates giving more buyers the ability to buy, the competition will continue making prices increase for an extended amount of time.
What will it take to have prices cool down? We would need to see either a large quantity of inventory hit the market to lessen the competition or interest rates increase making affordability an issue and causing buyers to stop looking for a home to buy. Unfortunately for buyers, I don't foresee this happening in the immediate near future (or at all this year). The positive to buying right now is locking in that super low interest rate and then sitting back and watching the prices continue to increase while watching your equity increase!
If you have any questions about your specific scenario, please call me! I'm always happy to help!