A pandemic of COVIDs has raised the chances of an extreme response to curbing a global influenza pandemic in 2021. It appears the prolonged and rapid decline in real estate values may continue into the early 2020s as the continued need for home sellers and home buyers particularly those in Metro areas could decrease. It is anticipated that the continued trend towards increased housing market inventory, coupled with continued high mortgage rates, may significantly dampen the real estate market as the years go on. While the mortgage rate for the 30-year fixed rate is 3.02%, that rate is also a rising concern. Recent federal policy rates have not matched expected inflation and, as a result, mortgage rates are on the rise, making it difficult to find affordable interest rates, according to Redfin.
The rising mortgage rate in 2021 will force individuals and small businesses to move out of town or move to areas with fewer options, added Toschi. If the cost of homeownership decreases due to the COVID situation, you could start to see small, family-based investment opportunities open up, he said. The epidemic may continue to hit cities where aging millennials and millennial-identifying individuals are living, said John Giangreco, senior economist at the Ohio State University-based Hamilton Project. With a minimum age of 25, these individuals are entering their home-buying years and will have difficulty affording a home. So if real estate values and affordability have risen as a result of a pandemic, it will most likely hit these communities.
The greatest vulnerability in an era of catastrophic global health events,” said Giangreco, is the human community’s ability to maintain public trust and awareness of environmental issues. Over time, and especially as a result of an ongoing public health crisis, fear and anxiety could lead to a decline in public health and possibly a resurgence of the epidemic. Whether or not the COVID pandemic will affect housing and home prices is unclear, said Gioia, noting that the virus may stay in place for several years in certain regions. He noted, however, that recent experience has shown an overall high level of risk for reoccurrence. Greater diversity in economic trends in the future could further challenge the real estate market. Poplar Homes, a California-based real estate technology and services company,” said millions of older millennials are creating families and were planning to buy a home in 2022 to 2025.
It is anticipated that the current wave of home sales will remain high as buyers and sellers alike will be motivated by a variety of factors, including the likelihood of potential closure or quarantine of the United States, the availability of new homes in a localized market, a strong economy and a low vacancy rate. Where is home prices headed in 2021? The Chart From Redfin “Our best guess is we’ll see more of a regional effect,” said Lina Yee, a certified foreclosure specialist and vice president of research at Redfin.