Whether you’re a buyer or a seller, it pays to stay abreast of trends in the real estate market. And there are indeed some marked trends to take note of this year. Read on, then, to discover some Chicago real estate trends to keep your eye on in 2021.
Mortgage Interest Rates
One of the most important of these real estate trends concerns mortgage interest rates, which hit record lows in 2020.
“Mortgage rates are coming off of record lows entering 2021, with a 30-year fixed-rate loan’s average having slipped down to 2.66%. . . . [T]here will be some fluctuation as mortgage rates climb back up to a modest3% on average. And, according to . . . the final average rate is projected to be 3.4% by the end of the year. Overall, these rates are low because the economy is still in recovery following COVID-19, and they don’t seem to be going anywhere soon.”
And this is good news for both buyers and sellers.
Mortgage rates will remain affordable for buyers throughout 2021. They won’t have to hurry to close in order to stay ahead of rising rates, and they won’t have to pursue a mortgage rate lock. The good news for sellers is that lower rates will allow more buyers to enter the market, thus giving them more opportunity to hold out for a better sale price.
Housing Affordability
Another of the real estate trends to keep an eye on in 2021, especially for buyers, is that homes will likely become less affordable.
“While 2020’s low mortgage rates will continue into 2021 with some reasonable increase, they can only do so much to offset overall housing prices. Prices were already high last year based on reports from the U.S.Census Bureau. The median U.S. (new) home sales price was $355,900 in December, a difference of $24,500 to 2019’s median of $331,400 at the same time in 2019. Prospective homebuyers will find these housing prices aren’t going to drop either. Predictions forecast median sale price appreciation to go up by 5.7%.”
This is good news for sellers, of course, but not so good for buyers. With home prices continually rising, buyers, particularly first-time buyers, may have to look into one of the down payment assistance programs to get into the market. To find out about the best option for you, contact a Chicago agent at 773.233.2301.
Buyers’ Challenges
Similarly, when you add low inventory and high demand to rising home prices, you get a seller’s market and a challenging market for buyers. Here’s what industry experts say about this one of 2021’s real estate trends . . .
“[E]entering the housing market as a home buyer could prove challenging in 2021. Not only are housing prices expected to continuously rise, but due to increased demand, you should expect a competitive market. So, if you want to purchase a home, chances are that you’ll have to act fast to beat out the competition.”
The Virtual Trend
Another of the real estate trends of 2021 to note is the fact that real estate has pretty much gone virtual. The advent of COVID-19 has been the main driver here.
“Before the pandemic, many of us enjoyed perusing online, looking at different homes for sale in our area. But with social distancing in play, virtual formats have become a new normal, with many real estate agents utilizing live stream features on social media for open houses, and more emphasis placed on virtual tours, videos, and photographs in home listings.”
Home Value Growth
Despite the challenges of high demand and low supply countrywide, there remains a bright spot in that home value growth will continue throughout 2021. Owing to this one of our real estate trends, buying a home will still be a good investment, and selling will likely fetch a better price.
According to industry watchers, “high demand and low supply across the U.S. housing market will also drive continued home value growth into 2021. Home values are expected to increase by 10.3% from November 2020 to November 2021. There is a benefit to this, despite how it makes purchasing harder on buyers. As home value continues to increase, so does its resale value, which is important for current homeowners.”
This trend will also help home buyers/owners avoid an underwater or upside-down mortgage. “When home values go up, current homeowners have a larger cushion between their property’s value and the money they owe on their home.”
Need for a Good Agent
Included among the real estate trends to keep your eye on in 2021 is a final one we haven’t explicitly mentioned, but has been implied throughout. And that is that the services of a good real estate agent are more critical than ever. So if you’d like to leverage these real estate trends to your best advantage, contact us today at 773.233.2301.