The housing market has experienced so many changes within the past year, including some that have never been seen before. Thirty-year mortgage rates hit historic lows at 2.65% the week ending Jan. 7, 2021, according to data from Freddie Mac, falling approximately one percentage point from a year earlier, when the 30-year rate was 3.64%. On Feb. 25, Freddie Mac reported the 30-year rate had risen to 2.97% but still remained near historic lows. For perspective, over two years earlier, in November 2018, the 30-year mortgage rate was close to two percentage points higher at 4.94%.
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“The remainder of 2021 will see mortgage rates increase gradually due to the increase in economic spending. We anticipate mortgage rates on a 30-year fixed rate to get to 3.24% by summer,” said Jason Gelios, a top-producing realtor with Community Choice Realty in Southeast Michigan.
With rising mortgage rates, low home inventory and rising home prices, what can sellers, buyers and real estate agents expect from the housing market for the rest of 2021? GOBankingRates interviewed the experts to find out.
What Home Sellers Can Expect for the Rest of 2021
The seller’s market is stronger than ever due to low home inventory. So if you’ve been on the fence about selling, now may be the time to make a move.
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Associate broker Vincent Cyr of the Cyr Team at Keller Williams said, “There has never been a better seller’s market in history. For those who wish to sell high and have more tolerance and acceptance from buyers for less-than-perfect homes, 2021 is the year to make it happen. As interest rates climb, pricing power will decrease. If you thought about selling in the next year or two, accelerate those plans!”
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Bill Samuel, a residential real estate developer and owner of Blue Ladder Development, offered this insight on how you can benefit from the current housing market. “If you are priced correctly, expect buyers to go above and beyond the typical expectations to purchase your property. Many buyers are overbidding the asking price, waiving inspection contingencies, expediting the closing and doing anything else they can to not lose out on a property.”
What Homebuyers Can Expect for the Rest of 2021
If you’re buying a home in 2021, you’ll have to be on top of your game due to the extreme competition from other homebuyers.
“Expect a very competitive market with multiple offers on most of the properties you are interested in at least for the next several months,” Samuel said. “If the current supply and demand of the market continue for the rest of the year, then expect this year to be even more competitive than last year.”
Associate broker Cyr echoes Samuel’s sentiments and offers insight on pricing on existing homes and new construction.
“We expect continued low levels of inventory, competitive bidding on properties and increased home prices. New construction will also see increased prices due to lumber price increases and shortage of labor. We see interest rates remaining low but inching higher as the economy improves. This will increase the Buyer’s FOMO.”
Why Is the Housing Inventory So Low?
You can thank COVID-19, which bears some responsibility for the lack of new listings. Selling during the pandemic can be a hassle, and many people are using their homes as their offices, which could make relocating very inconvenient. But there’s another reason. The historically low mortgage rates have resulted in droves of homeowners choosing to refinance their homes, according to a Consumer Finance Institute Special Report.
Here’s some additional insight from Chuck Vander Stelt, real estate agent and founder of Quadwalls.com:
“An incredible number of homeowners refinanced their homes during 2020. These homeowners are more likely to stay put and enjoy their lower house payment.”
Vander Stelt also believes that the quarantines in effect in many states have caused homeowners to take a new interest in their current living spaces, which means many won’t be motivated to sell. “Secondly, the home hardware and improvements sector had a fantastic 2020. There was nothing else to do but stay home and work on your home. Less homes will be put on the market in 2021 because so many homeowners improved their nest in 2020 with better maintenance, updates or adding a new feature like a deck, pool or three-seasons room.”
What Real Estate Agents Can Expect for the Rest of 2021
Although the buyer’s market is hot and offers are coming from all directions, that doesn’t mean everything’s coming up roses for real estate agents.
Associate broker Cyr said, “Listings are like gold — very hard to get, but they sell quickly. Buyers are consuming significant time and energy as agents may be writing several offers over a longer period of time before a client will actually get a house (and the agent gets paid). Don’t let the news hype about the housing market make you assume that realtors are enjoying this environment.”
And while buyers are doing the unexpected to be able to get their hands on a house right now, that behavior may change before the year is out, according to Samuel. “If the general public is confident and comfortable with the prospects of the COVID vaccine and become more willing to list their house for sale, then it is possible that the increase in supply could level out the market and slow it down quite a bit.”
No matter what, the way real estate agents sell homes has changed forever due to the pandemic, according to Kris Lippi, a licensed real estate broker and the business owner of the popular real estate website ISoldMyHouse.com.
“People working in real estate should already be comfortable with the fact that virtual home tours and remote closings will be here to stay even when the threat of this pandemic has gone away. The convenience that this gives to both sellers and buyers is something that the real estate industry will continue to promote and take advantage of. The benefits of this kind of arrangement are far more than just avoiding physical contact in the fear of contracting the virus, which is why they are here to stay.”
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Last updated: March 1, 2021
This article originally appeared on GOBankingRates.com: What Realtors Say To Expect From the Housing Market for the Rest of 2021