We all know the real estate market was on fire last year. Buyer demand was way up, and the supply of homes available for sale hit record lows.
Basic economics says the price anything is determined by the supply and demand ratio, so home prices skyrocketed last year. Dr. Lynn Fisher, Deputy Director of the Federal Housing Finance Agency (FHFA) Division of Research and Statistics, explains:
“House prices nationwide recorded the largest annual and quarterly increase in the history of the FHFA Home Price Index. Low mortgage rates, pent up demand from homebuyers, and a limited housing supply propelled every region of the country to experience faster growth in 2020 compared to a year ago despite the pandemic.”
Here are the year-end home price appreciation numbers from the FHFA and two other prominent pricing indexes:
- Federal Housing Finance Agency House Price Index Report: 10.8%
- CoreLogic Home Price Insights: 9.2%
- S&P Case-Shiller U.S. National Home Price Index: 10.4%
The past year was truly a remarkable time for homeowners as prices appreciated substantially. Lawrence Yun, Senior Economist at the National Association of Realtors (NAR), reveals:
“A typical homeowner in 2020, just by being a homeowner, would have accumulated around $24,000 in housing wealth.”
What Will Happen with Home Prices in 2021?
Many experts believe buyer demand will soften somewhat as mortgage rates are poised to bump up slightly. Some also believe the inventory challenge will ease as more listings come to the market throughout the year.
Based on this, most forecasters anticipate we’ll see strong appreciation in 2021 – but not as strong as last year. Here are seven prominent groups and their projections:
Source: Keeping Current Matters
The Bottom Line
Home price appreciation will be strong this year, but it won’t reach the historic levels of 2020.
If you feel ready to buy, purchasing a home this season may save you significantly over time. We would love to help you take advantage of today’s market and get a great deal on a new home. If you would like to speak with one of our mortgage advisors and start your home-buying journey, fill out the form below.
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