Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.
According to the National Association of Realtors(NAR), the current number of single-family homes for sale is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 with approximately 370,000 fewer homes for salethan there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1. As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2. Some households impacted financially by the pandemic will be forced to sell.
Low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. Today, we’re starting 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason why demand is expected to remain high throughout the new year.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts:
There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that home values in the country will continue to appreciate.
Article from:Keeping Current Matters Jan 2021
|It might seem strange that mortgage companies use gross monthly income when determining affordability instead of ‘take-home’ pay. After all, it’s the take-home pay that consumers use for their monthly expenses and bills – including the mortgage. But there are a few good reasons why lenders use the gross amount.
First, it’s universal. Lenders A, B, and C all use gross monthly income to calculate debt-to-income ratio (and thus affordability), so everyone is qualified using the same guidelines. There are a few loans that do take monthly expenses and ‘residual’ income into consideration, but most every other program uses gross monthly income.
Second, it’s a figure that most consumers readily know. Calculating net income with taxes, deductions, etc. is complicated and can vary month-to-month. Gross income is stable and easier to quickly calculate monthly. It would be impossible for lenders to adjust their loan programs for each individual’s specific expenses and deductions.
Third, employers report income each year to the IRS, and the amount reported is gross income, not net. When consumers are asked to document income on their loan application, the last two years of W2 forms are needed along with recent paystubs. The gross amounts on the paystubs should align with the W2 forms. Trying to parse net income from these documents is impossible.
If you’re thinking about buying your first home and want to know what you might qualify for, there’s no shortage of online prequalification calculators to help you get started. Just remember to enter your gross monthly income, not your net or take-home pay, so you don’t short-change yourself.
From Keller Williams News Dec 2020
This year has been nonstop uncertainty. The coronavirus pandemic led to shutdowns and major changes to our everyday lives. Those changes are likely to continue as we head into winter. Cities have been hard-hit, not only in terms of public health, but also economically.
Despite everything, the housing market is one thing that’s been consistently strong this year. So, what do experts think next year will bring? Will that positivity hold steady, or are we in for a bust?
If inventory remains low into early 2021, it’s possible that home prices will continue to go up. The median asking price for properties in September 2020, according to Realtor.com, was $350,000. That’s up 11% compared to last year. Inventory has declined 39% year-over-year, despite a quick burst of new listings in August. Increased demand and a dwindling supply are great for sellers but not so much for buyers.
Suburbs Reign Supreme
There has been a shift in interest away from urban areas, as many people are packing up to find homes with more space and less proximity to others. Some of the most popular areas in 2020 have included Colorado Springs, CO; Reynoldsburg, OH; and Rochester, NY. We could see continued flight from urban areas to suburbs in 2021.
Despite all of the headwinds and what feels like a barrage of negative information, there is some optimism in housing starts. Consumer confidence was high in September, and builder sentiment similarly seems to be at an all-time high.
Could There Be Downsides?
While there are some indicators of positivity, there are also potential negatives that could come into play. Unemployment numbers are still high, and rolling lockdowns throughout the winter could cause those numbers to rise. Some predict that foreclosures could also rise as a result.
When facing uncertainty and anxiety, there’s a tendency among consumers and would-be homebuyers to hoard their cash. Personal savings rates have actually gone up recently, but that means there may be less spending going on, particularly on bigger items like houses.
Finally, while there are some unnerving indicators, we do know with almost certainty that record-low mortgage rates will hold. The fed has signaled their intention to keep rates low for the foreseeable future.
Article From Keller Williams Dec. 2020