Real Estate Forecast
What will the housing market look like in 2021? We are getting this question a lot as homeowners and home buyers decide whether to put their plans on hold until next year.
Here is the latest report from the local Cincinnati Area Board of Realtors:
“Real estate sales in Cincinnati are “OFF the CHARTS” as a result of low inventory, low interest rates and the number of buyers,” said Kelly Meyer, President of the Cincinnati Area Board of Realtors. For a second month in a row, Cincinnati was rated as one of the fastest markets for selling homes in the nation, mainly due to its affordability and low interest rates,” said Meyer. “We are in unique times with such a pent-up demand for housing. If you want to buy or sell, now is the time to get involved.”
The October average home price climbed to $257,109 compared to $221,720 a year earlier, a + 16.0% increase. At the same time, the inventory of homes for sale, as of October 31, continued its year-over-year declining trend, dropping from 4,429 a year ago to 2,515 in October 2020, down – 43.2 %.
According to Realtor.com, here are some observations from 2020:
- Consumers Remain Optimistic About Home Buying in the Current Environment
- COVID-19 Moved Consumer Timelines toward Buying Sooner
- Larger Homes and Better Neighborhoods Motivated Some Buyers to Look for Higher-Priced Homes
- Additional Savings, Financial Security Concerns, and Economy Motivated Other Buyers to Look for Lower-Priced Homes
- Lower Mortgage Rates Helped Buyers Reach for Larger, Higher-Priced Homes
- Sheltering At Home Helped Consumers Save More Money for a Down Payment
- Consumers More Willing to Commute Longer Distances Post-Pandemic
The National Association of Realtors reports that personal savings is at an all time high:
Mortgage interest rates are one factor affecting the real estate market. The National Association of Realtor’s Cheif Economist states that “mortgage rates are likely to remain stable near 3 percent all the way through 2021.”
Another interesting observation is the spike in personal savings rate at a record high level. When you look at consumers as a whole, many of them purposely curbed spending due to uncertainty which began in the Spring. Others have more in savings because there is not as much opportunity for people to go out and spend their disposable income on travel, entertainment, arts, dining, and more. With additional savings and more time spent at home, we have seen a boom in remodeling as well as people looking to upgrade to a home with more space/amenities. Inventory is still low compared to the buyer demand, making it a prime time to sell real estate.
Recent reports from the National Association of Realtors predict that once the coronavirus vaccine is widely available, that could unleash spending and stimulate the economy. At that point, consumers may begin spending their savings on travel, dining, and entertainment again. Now could be an ideal time to sell your home while personal savings it at an all-time high, and consumers are placing a high value on their home environment.
For anyone thinking of a move in the next 6 months, now is the time to reach out to your trusted advisor to determine the best timing and preparations for your particular situation.