What Does 2021 Have in Store for Home Values?

According to the latest CoreLogic, Home Price Insights Report, nationwide home values increased by 8.2% over the past twelve months. The dramatic rise was brought about as the inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record low mortgage rates. As CoreLogic explained:

“Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register about 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus outbreaks continued across the country, which delayed some sellers from putting their house on the market.

While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record low mortgage rates available; this is increasing buyer demand whole for-sale inventory is in short supply. “

Where will home values go in 2021?

Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.

Housing Supply:

According to the National Association of Realtors, the current number of single- family homes for sale is 1,080,000. At the same time last year, that number stood at 1.450,000. We are entering 2021 with approximately 370,000 fewer homes for sale than there were one year ago.

However, there is some speculation that they inventory crush will ease somewhat as we move through the new year for two reasons:

  1. As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
  2. Some households impacted financially by the pandemic will be forced to sell.

Housing Demand:

Low Mortgage rates have driven buyer demand over the past twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. Today, we are starting 2021 with rates one full percent lower than that. Low rates create a great opportunity for homebuyers, which is one reason why demand is expecting to remain high throughout the new year.

Taking into consideration these projections on housing supply and demand, real estate analytics forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are the forecasts:

Bottom Line:

There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of supply and demand mandates that home values in the country will continue to appreciate.

Looking Ahead… 2021 Home Market

Experts have forecasted an optimistic year for the 2021 housing market!

While 2020 came with many unknowns, the housing market continued to stay strong. Experts have weighed in on what is to come with 2021, and they believe the market will continue to be a strong force.

Mortgage Interest Rates are projected to remain at or near 3% in 2021, fueling strong buyer activity.

Home sales are forecasted to increase in 2021 while interest rates continue to remain low.

Home Prices are also expected to continue appreciating as more people buy in the coming year.

The Path to Homeownership

Do you feel ready to embark down the path to homeownership? Read over these steps to familiarize yourself with the process!

The journey to becoming a homeowner today can seen overwhelming but these listed steps are here to simplify the process for you. The first step down the path begins with saving money for a down payment. The second step is to understand your credit score and clear up any outstanding debts. The next step would be to find a real estate agent who can guide you through the process. After, make sure to get pre-approved for a loan, to suggest that you are a motivated buyer. The fifth step would be to work with your real estate agent to find a home that meets your needs, which leads you to making an offer. Once the offer is accepted, make sure to have a home inspection to find any hidden issues with the home. After the inspection make sure to get a home appraisal to ensure the property is worth the price you would be paying. Once these steps are completed with your trusted agent by your side, close the sale by scheduling a date to sign all of the final paperwork! The last step being to move into your brand new home!

Key Terms to Know in the Home Buying Process

Thinking about purchasing a home but feel overwhelmed by all the terms and the process? Let this infographic help you to better understand some common terms that might come up.

Appraisal: A professional analysis used to estimate the value of a home.

Closing Costs: The fees required to complete the real estate transaction. Paid at closing, they include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed.

Credit Score: A number ranging form 300-850 that’s based on an analysis of your credit history.

Down Payment: Down payments are typically 3-20% of the purchase price of the home. Some 0% down programs are also available.

Mortgage Rate: The interest rate you pay to borrow money when buying a home.

Pre- Approval Letter: A letter from a lender indicating you qualify for a mortgage of a specific amount.

Real Estate Professional: An individual who provides services in buying and selling homes.

The best way to ensure your home buying process is a confident one is to find a real estate pro who will guide you through every aspect of the transaction with the “the heart of a teacher” by putting your needs first.

Where are Home Values Headed over the Next 12 Months?

As shelter-in-place orders were implemented earlier this year, many questioned what the shutdown would mean to the real estate market. Specifically, there was concern about home values. After years of rising home prices, would 2020 be the year this appreciation trend would come to a screeching halt? Even worse, would home values begin to depreciate?

Original forecasts modeled this uncertainty, and they ranged anywhere from home values gaining 3% (Zelman & Associates) to home values depreciating by more than 6% (CoreLogic).

However, as the year unfolded, it became clear that there would be little negative impact on the housing market. As Mark Fleming, Chief Economist at First American, recently revealed:

“The only major industry to display immunity to the economic impacts of the coronavirus is the housing market.”

Have prices continued to appreciate so far this year?

Last week, the Federal Housing Finance Agency (FHFA) released its latest Home Price Index. The report showed home prices actually rose 6.5% from the same time last year. FHFA also noted that price appreciation accelerated to record levels over the summer months:

“Between May & July 2020, national prices increased by over 2%, which represents the largest two-month price increase observed since the start of the index in 1991.”

What are the experts forecasting for home prices going forward?

Where Are Home Values Headed Over the Next 12 Months? | MyKCM

Below is a graph of home price projections for the next year. Since the market has changed dramatically over the last few months, this graph shows forecasts that have been published since September 1st.

Bottom Line

The numbers show that home values have weathered the storm of the pandemic. Let’s connect if you want to know what your home is currently worth and how that may enable you to make a move this year.

Record Breaking Sale at The Palms!

 

Just sold 555 4th Street #825 in San Francisco, a sweet, sunny condo at The Palms in South Beach for $780,000 – or $1,300 per square foot – the highest price per square foot for a one-bedroom in the building ever!

Whether you are looking to buy or sell a property, I always support my clients to get the best price possible!

       

Being A Homebuyer Can Be Challenging

Being a homebuyer can be challenging, but there are some things you can do to be sure you will succeed. First time homebuyers often come to the table unprepared and with misconceptions. Don’t let that happen. Here are some things to consider:

  1. Time is of the essence! When the market is active it is particularly important to move fast with a decisive offer right in the beginning. If you don’t you will definitely not have a good chance on winning the bid.
  2. Don’t expect a property to be perfect. There is no such thing as a perfect property. Try to look at the pros and cons and weigh the good with the bad. You can always turn a property into your version of perfect once it is yours.
  3. You maybe can’t have it all, so be prepared to compromise. It is unlikely you will find a property that has everything you want in a home. Think about the things you absolutely must have and the the items it would be “nice to have”. Make lists.
  4. Stay in your budget. Do not pay attention to what others are saying or doing. You know how much you can spend. Don’t forget that in addition to paying your mortgage you will need to factor into monthly expenses your taxes, utilities and maintenance.
  5. Understand what you need from a new home, verses what you want or would like to have. Communicating with your agent about your needs will help the process of finding a new home move along more quickly.
  6. Educate yourself about the Financial Process. Your agent and lender can help you with that. Buying a home may be the biggest financial event in your life. Don’t let yourself be intimidated. Start the process early by gathering information and documentation about your finances. Be sure to get a trustworthy loan officer.
  7. Make sure you get pre-approved for a loan before you start shopping. That way you will know exactly how much you can spend. You will never have to  experience being turned down for a mortgage. It would be very frustrating to fall in love with a house you can’t have.
  8. Forget about low ball offers. You run the risk of insulting the seller. Let your agent determine a fair market value by running the comparables and advising you on a strategy that will win you your new home.
  9. Be ready. Educate yourself about neighborhoods, commute times and anything about location which may impact your life. When the time comes you will have done your homework and will be ready to perform.
  10. Determining a home’s current market value is not something that Redfin or Zillow can provide with any accuracy. It is worlds better to have an agent who is familiar with your market. Have them visit the property to understand the full scope of the situation. They will be able to run a more true-to-life market analysis that will be more telling than any algorithm.

 

Thinking about buying a home or condo in San Francisco?

Thinking about buying a home or condo in San Francisco? Please join us for a free workshop at the Mission Bay Condo Store on Sunday February 25th at 6 pm. Learn everything you will need to know to be a successful home buyer. The market has been very active so far in 2018, and  we will be seeing even more activity as the season gets underway. Let us help you compete in this tough market. There are so many opportunities to purchase in San Francisco. We would be glad to help make it a smooth and enjoyable process.