What does 2021 have in store for home values?

In a recent article posted by Keeping Current Matters, and according to the National Association of Realtors (NAR), 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 the 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.

WHAT ABOUT HOUSING DEMAND?

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

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

WHAT’S NEXT FOR THE BAY AREA?

SFGate is predicting the following for the Bay Area 2021 Housing Market Predictions:

• Stop renting, it’s time to buy: It’s an especially good time to get your foot in the market if you’ve been renting and considering buying. She just advises not to wait too long.

• Suburbs are still hot: In the search for home offices, backyards and more space, many homebuyers began to gravitate toward the greater Bay Area in 2020, creating more demand in places where competition usually wasn’t as fierce.

• Real estate norms have shifted: Open houses used to be an important part of the home-buying process, but they likely won’t be back in 2021. For both agents and sellers, this is actually a positive change.

• We’ll hit the bottom of the rental market, eventually: There are still more renters moving out of the Bay Area than moving in. Prices will continue to decrease in the short term. I wouldn’t say we’re at the bottom yet, but we could be nearing it.

• Space is crucial, for renting and buying: Outdoor space and “zoom rooms” were important for house hunters in 2020, but space was essential for renters, too.