Real deal: House marketing predictions for 2021
Real Estate
Construction
5 MIN READ

Real deal: House marketing predictions for 2021

May 18, 2022
Fred Layno

We are now entering the second half of 2021. Last year, there was a boom in house-buying with record-low mortgage rates and a surge of relocations, due to the demands of remote work. With the fast distribution of the COVID-19 vaccines which will hopefully signal the end of the pandemic, the competition within the house marketing industry has been tougher than ever.

We can expect some of the market trends caused by the pandemic to continue for the foreseeable future. 


READ: Road to your dream house — 8 tips for first-time homebuyers


Here are some predictions by expert on housing market trends for buyers, sellers, and new construction for Summer 2021: 


Buyers

The beginning of 2021 has seen historic lows for interest rates for 30-year, fixed-rate mortgages. 

In spring, however, the mortgage interest rates are seen having an upward trend, albeit still quite low from a historical standpoint. According to mortgage loan company Freddie Mac, the average interest rate for a 30-year, fixed-rate mortgage are up at 3.13% as of April 8. This slight increase was brought about by the high demand due to low interest rates, an increase in new homeowners, and a demand for more space among existing ones. 

The availability of homes on the market have dipped significantly. According to an April report from realtor.com, the number of homes in March 2021 is 52% lower than in March 2020. Because of this, bidding wars are expected to happen among homebuyers, which can result into an increase in prices once again. 

While the supply is expected to slow down, things are expected to pick up pace by the end of the year once sellers become more comfortable with the new market environment and once construction begins to boom again. The market will generally remain easy on sellers, mortgage rates will remain relatively low, and the selection of homes for sale will gradually improve.

Construction of single-family housing is expected to grow for another 9% in 2021. Majority of the homebuyers across the U.S. are millennials, those who are 30 years old and above. The pandemic proved to be a popular time for them to consider buying a home. With the vaccines being rolled out, experts believe that these strong transaction numbers will continue once the cases of COVID-19 decline. 

Sellers

It seems that sellers can now re-enter the market with a bit of renewed confidence. Eric Fontanot, president of Patten Title, says that home prices are expected to continue to climb later in the year partially due to inventory unable to keep up with the strong buyer demand, slow developments in construction, and low interest rates. 

A report in realtor.com points out that while the number of new listings in March 2021 was 20% lower than in March 2020, it is not as low as February’s new listings number, which was 24.5% lower than February 2020.

The number of new listings will continue to gradually increase. People looking to sell their houses are at an advantage, as home prices are expected to continue to go up. The National Association of Realtors reports that the national median home price for existing homes at the early part of the year was at USD $313,000, a 15.8% increase from a year prior.

Danielle Hale, chief economist at realtor.com says: 

“We expect sales to grow 7% and prices to rise another 5.7% on top of 2020’s already high levels. While we expect mortgage rates to tick up gradually, sales and price growth will be propelled by still strong demand, a recovering economy, and still low mortgage rates. High buyer demand and still-lagging supply will keep prices growing, but at a slower pace than 2020 as buyers contend with mortgage rate and price increases that create affordability challenges.”


New construction

The pandemic has greatly affected the residential construction rates, reducing it to a number not yet seen since the last recession. 

Construction companies, however, are trying to increase housing supply. In February, building permits for 1.68 million privately-owned new housing units have been authorized, according to the U.S. Census Bureau. That is 17% more than February of last year. 

According to Robert Dietz, senior vice president and chief economist at the National Association of Home Builders, “With home builder confidence near record highs, we expect continued gains for single-family construction, albeit at a lower growth rate than in 2019.”

Dietz says that new home sales growth will still slow down due to the fact that a growing share of sales has come from homes that have not started construction. Still, this will not affect buyer traffic, given the favorable demographics, a demand to lower-density markets, and low interest rates.

Dietz further predicts that challenges to supply will persist as residential construction continues to face limiting factors, such as higher costs, longer delivery times for building materials, and an ongoing shortage of labor. Construction of apartments will continue to be weak, especially in high-density markets. Meanwhile, remodeling demands will remain strong.


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Sources