January 17, 2020
- Home sales are expected to rise by around 10% in 2021.
- Home prices will also climb, but more moderate increases should help first-time buyers get into the market.
- Mortgage rates will continue to be favorable, staying at near historic lows of 3% on average.
There is plenty of room for optimism in 2021 as the housing market is expected to continue its upward trend. We take a closer look at the year ahead This Week in Real Estate.
* Real Estate in 2021: Plenty of Reason For Optimism. The housing market was a spectacular surprise in 2020 – and the positive trend will continue this year. Home sales in 2021 are expected to rise by around 10%. Home prices will also climb, but I expect more moderate increases than we’ve seen, a break for first-time buyers. Mortgage rates will continue to be favorable, staying at or near historic lows of 3% on average. The labor market will strengthen, especially as vaccines become widely available and life moves toward normal. Around 4 million net jobs could be added, a gradual rebound from the net loss of roughly 7 million during the pandemic year of 2020. The unemployment rate by the year’s end could be at 5.5%, a great improvement from 14.7% in April 2020 when the nation was under a strict lockdown, but still a few notches up from the generational low of 3.5% right before the pandemic.
* New-Year Optimism Reflected in Mortgage Applications Jump. Mortgage applications jumped 16.7% after a 4.2% drop last week, according to the Mortgage Bankers Association. “Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Kan said.“Even with the rise in mortgage rates, refinancing did not slow to begin the year, with the index hitting its highest level since last March,” said Kan. “Both conventional and government refinance applications increased, with applications for government loans having their strongest week since June 2012.”
* U.S. Foreclosure Activity Drops to 16-Year Low in 2020. ATTOM Data Solutions released its Year-End 2020 U.S. Foreclosure Market Report on Thursday, which shows foreclosure filings – default notices, scheduled auctions and bank repossessions – were down 57 percent from 2019 and down 93 percent from a peak of nearly 2.9 million in 2010, to the lowest level since tracking began in 2005. Those 214,323 properties with foreclosure filings in 2020 represented 0.16 percent of all U.S. housing units, down from 0.36 percent in 2019 and down from a peak of 2.23 percent in 2010. States that saw declines in foreclosure starts from last year included Oregon(down 79 percent); Kansas (down 77 percent); Arkansas (down 77 percent); Nevada (down 71 percent); and Massachusetts (down 70 percent).