There are too many variables to make accurate predictions. How high will mortgage rates go? Will inflation return? Are homes overpriced – will buyers even care if so?
WASHINGTON – According to the National Association of Realtors® (NAR), home sales plunged nearly 18% from March to April 2020 and another 10% from April to May. And then existing-home sales shot back up nearly 21% in June 2020.
The market can be dramatic, and unique variables associated with the end of a pandemic aren’t common territory. As a result, the best real estate experts can offer diverse forecasts for the future.
Some suggest the housing market is ripe for a correction. They say home prices have overheated, mortgage rates are on the rise, the supply of homes is anemic, and consumer confidence in the market is falling. Moreover, pandemic-related mortgage bailouts are set to expire this summer, which will add a whole new set of unknowns into the market.
“The home-sales market will experience countervailing forces of the higher push from more jobs, but also the pull back of higher mortgage rates,” says Lawrence Yun, NAR’s chief economist. “We will have to wait to see which force will be stronger.”
A recent Fitch Ratings report claimed prices nationally were 5.5% overvalued, and affordability has weakened substantially, especially for first-time home buyers. Home price growth in affordable cities like Detroit, Cleveland and Baltimore are far outpacing price growth in New York City and San Francisco.
As a result, the outlook for housing in 2021 is mixed. Some sectors, like single-family rentals, should thrive, while the for-sale market is facing a bevy of headwinds.
According to Fannie Mae, home affordability tops the list of buyer concerns, noting that consumer confidence in the housing market fell in February.
Source: CNBC (03/12/21) Olick, Diana
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