For months, you’ve been hearing about record-lows in the housing market:
Mortgage rates hit a record low 16 times in 2020, with another record low the first week of January 2021.
In addition, inventory continues to fall to new lows, creating more competition among buyers.
Let’s take a look at what these records mean for buyers and sellers in 2021.
Record Low Mortgage Rates
Mortgage rates fell to 2.65% for 30-year fixed-rate mortgages the week of Janaury 7, 2021. For buyers who are using financing to purchase a home, this means it’s less expensive to borrow money than ever before. With rates under 3%, buyers are able to take out a larger mortgage than they would have been able to in previous years.
This also means that buyers are ready to take advantage, even as home prices rise. Lawrence Yun, Chief Economist for National Association of Realtors, stated:
“The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates.”Lawrence Yun, Chief Economist for National Association of Realtors
If you are ready to buy in 2021, you need to be prepared to make fast decisions and act quickly.
Record Low Inventory
Another statistic you’ve heard over the past several months is that housing inventory is low. In December of 2020, there were 7,313 active single-family listings on the market, a 39.6% decrease compared to the previous December.
At 2 months supply, this means that if no other properties came on the market, all the active listings would be sold in 2 months. Anything under 6 months supply of inventory is considered a seller’s market.
With buyers searching due to low mortgage rates, home prices have risen, giving homeowners more equity.
Home prices are expected to continue to rise in 2021, though not as steadily as last year. However, Danielle Hale, Chief Economist at realtor.com, expects more sellers will begin to take advantage of the seller’s market in 2021, leading to more inventory:
“The bright spot for buyers is that more homes are likely to become available in the last six months of 2021. That should give folks more options to choose from and take away some of their urgency. With a larger selection, buyers may not be forced to make a decision in mere hours and will have more time to make up their minds.”Danielle Hale, Chief Economist at realtor.com
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