Home prices will continue to rise amid strong buyer competition and low inventory, boosting sellers’ profits, realtor.com® researchers say.
Buyer competition remains strong, and low inventory is pushing home prices to new highs—so sellers are likely to keep their market advantage next year, according to realtor.com®’s 2021 housing forecast. Home price growth may slow but will continue an upward trend, along with property appreciation for sellers, realtor.com® predicts.
The forecast notes that housing affordability is likely to worsen: “Buyers in 2020 received a huge boost in affordability as mortgage rates pushed to new lows throughout the year. However, a lack of inventory and strong demand drove prices up, erasing most of the boost,” realtor.com® notes. “As mortgage rates are no longer able to counteract rising home prices, affordability will be tested for buyers across the board in 2021.”
Housing shortages will largely continue to persist, though realtor.com® forecasters predict the number of listings to slowly rebound in 2021. “Additional homes hitting the market will offer buyers some relief in 2021, but it won’t be enough to tip the scales in favor of buyers,” realtor.com® notes. “As inventory slowly begins to replenish and buyer demand for homes remains steady, sellers will continue to be in the driver’s seat.”
However, the ongoing COVID-19 pandemic and the possibility of a double-dip recession are two major wild cards that could lie ahead in 2021, realtor.com® notes.