Last year saw a huge increase in home sales due to the pandemic and low mortgage rates. While 2021 is predicted to be another busy year in the housing market, there are some challenges ahead for home buyers as they face stiff competition and rising mortgage rates.
Mortgage rates increase, but still remain low.
Low mortgage rates have been a key factor in the rising number of home sales over the past year. While mortgages rates will remain low in 2021, they will begin to slowly increase. This, coupled with a high demand and low supply will lead to a very competitive housing market.
New construction will see a boom.
Since the demand for houses is so high, many home buyers are looking to new construction. The pandemic has put a damper on new construction because of the longer wait times for materials and a shortage of skilled laborers. Still, new construction will see a boom in the new year as there are not a lot of options out there for home buyers with a dwindling supply of existing construction.
The market will remain a seller’s market
Sellers really held the reins in 2020, and that trend will continue into 2021. The lack of homes available is the main force driving this trend. While 2021 will continue to be a seller’s market, buyers will still have the benefit of fairly low mortgage rates on their side, allowing them to put in more competitive offers to secure their dream home.
More home buyers will continue to look at the suburbs and rural areas for their dream home.
The lack of existing homes within city limits has led more buyers to look outside of the area for their home. More land in the suburbs and rural areas means more opportunity to build new construction, which will continue to grow at a fast pace in 2021.
More people are buying over renting.
Increasing rent prices play a large role in the number of new home buyers. That, coupled with low mortgage rates makes owning a home a much more attractive option. Home ownership is predicted to become the highest it’s been since 2005, indicating a strong market.