Almost a year ago, in March of 2020, the real estate market looked like it was headed into a steep decline due to widespread stay-home orders. However, the opposite happened. According to Zillow, 5.64 million homes were sold in 2020, up 5.6% from 2019.
So what can we expect in 2021? Will prices continue to rise? And, how will the corona virus vaccine effect the housing market?
Although no one can predict the future, here are some things Michigan homebuyers could encounter in the year ahead.
Housing Supply May Increase
After experiencing such a shortage of homes, buyers could feel some relief with more properties being listed this year. In 2020 many sellers either pulled their property off the market as they didn’t want to risk contracting COVID-19 through an open house or other in-person interactions. With more and more Metro Detroiters receiving the Coronavirus vaccine, and an overall brighter outlook on recovery, sellers may feel more comfortable listing their homes and opening them up to potential buyers. However, inventory may not increase right away.
“Some people will feel comfortable listing their home during the first half of 2021,” says Ali Wolf, chief economist for Zonda, a real estate consultancy. “Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”
Home Prices Could Rise, But Not as Rapidly as 2020
Increased inventory will take some of the pressure off the market, however with the increased demand, buyers shouldn’t expect home prices to drop anytime soon.
The good news is that the rate at which prices will increase isn’t expected to escalate as quickly as they did during the second half of 2020.
“The very rapid home price growth that we have seen over the last few months should start to moderate,” says Frank Nothaft, chief economist of real estate data firm CoreLogic. “I expect price growth to slow.”
Possible Increase in Mortgage Rates
Rates were an average 2.65% for 30-year fixed-rate loans in the week ending Jan. 7, according to Freddie Mac.
A 2021 Housing Market Forecast from realtor.com anticipates mortgage rates to slowly begin rising toward the last half of 2021 and reach 3.4% by the end of the year. Even at 3.4%, this rate is still relatively low and can help buyers afford any home price increases.
About Metro Detroit Lender, Julie Krumholz
Julie Krumholz, is an experienced lender at Superior National Bank in Troy, Michigan. With over 35 years in Metro Detroit’s mortgage industry, Julie’s goal is to provide the best possible mortgage experience and the most competitive rates. Julie has vast experience in FHA loans, VA Loans, USDA loans, portfolio loans, MSHDA loans and more.
