It was an eventful year for the real estate market in 2020. What began as a typical year turned into a world of uncertainty for buyers and sellers. The COVID-19 pandemic not only kept buyers in their current homes, but also delayed the start of the traditional home buying season.
As we count down the final days of the year, many Coloradans are looking ahead. More specifically, they’re wondering if they should buy a home in 2021.
Here’s what we know regarding possible real estate market trends for the next calendar year.
Mortgage rates will remain low
Record low mortgage rates were one of the few bright spots in 2020. A major question among lenders is whether rates will remain this low for the foreseeable future.
According to HousingWire, real estate professionals expect mortgage rates to be relatively stable for the first part of 2021. The unknown variable in this equation is the virus. Once a higher percentage of Americans are vaccinated, we can project a gradual re-opening of businesses and, in turn, an upward economic trend.
But don’t assume that a grasp on the virus translates to significantly higher mortgage rates. Though we might be done with record low rates, top-tier buyers should have no problem obtaining a favorable rate. Realtor.com predicts only a slight rate increase in their housing forecast.
The comeback of seasonality
It seems forever ago that we had a “normal” home buying season. Well, in case you forgot, we tend to see more buyers as the weather warms up. In 2020, that usual surge of activity held off until well into the summer and early fall.
Those hoping to purchase a home in 2021 can plan on a return of seasonality in the industry. Buyers can spend the next few months preparing for what’s sure to be a competitive market in spring and summer. This means getting a pre-approval letter ahead of time and choosing the right real estate agent.
Rising home prices
Colorado homeowners continue to benefit from soaring home values. For example, someone who bought their home in the last few years likely has tens of thousands of dollars in equity. Higher prices are the norm at both the state and national levels.
Hopeful buyers must understand that they’re in the middle of a seller’s market. While you might come across several overpriced homes, the reality is that some buyers are willing to pay a premium. So remember to stay positive and allow your real estate agent to do the heavy lifting.
Don’t get discouraged if you miss out on a home that you really like. There will be countless opportunities to land an incredible residence, even if it’s not in 2021. The last thing you want to do is overspend on a house and wind up regretting your decision.
You could argue that low inventory was the second-biggest storyline in real estate this year, besides low mortgage rates. There were plenty of buyers ready to make a deal, but only a fraction of them closed on a home. This is yet another trickle-down effect of the pandemic — many would-be buyers at the beginning of 2020 decided to wait things out.
We’re crossing our fingers that buyers will not run into the same issue in 2021. Per HousingWire, both the Mortgage Bankers Association and Fannie Mae predict the strongest single-family construction that we’ve seen since 2018. Again, though, you need to be mindful of other buyers and know when it’s time to move quickly.
Virtual options are here
The pandemic forced the industry to adapt like never before. From third-party buyers to virtual open houses, real estate professionals essentially changed processes overnight. And many people expect these services to be a mainstay in 2021 and beyond.
Can you afford to buy a house in 2021?
For aspiring Colorado homeowners, this decision usually comes down to cost. They might be under the impression that a lack of down payment funds or a low credit score will keep them from buying a home in this market. They don’t realize that there isn’t just one route to homeownership!
At American Home Agents, we are proud to partner with American Financing. They’re a national mortgage lender that emphasizes finding the best type of mortgage loan for their clients. They also offer programs for first-time home buyers and down payment assistance for those who qualify.
Why put off your home buying goals another year? See what the team at American Home Agents can do for you. Give us a call at (303) 695-5900.