Good News for 2021!
During this weird time in history, the housing market has been the backbone of the economic recovery in the United States. However, the housing market has actually been doing extremely well over the past few years. With the COVID-19 pandemic, the economy was briefly paused throughout the spring which caused a halt during the housing market’s busiest time. This raised concern for the industry as a whole! Once the Shelter-in-Place orders were gradually lifted throughout each state, the housing market opened up and was hot! Since the market was briefly paused during the Spring months, we are seeing more people enter the market during the Fall. In a normal year, the Winter months begin a decline in the housing market. However, we have to deny the instinct of slowing down in real estate.
LOW Interest Rates:
To avoid any harsh movements in the market, interest rates will be low, but for how long? It is estimated that interest rates will be low for an extended period of time; possibly through 2023.
In the market today, we are seeing houses continuing to rise in price because of the low interest rates. Surprisingly, this is great news for home buyers! When interest rates are low, monthly payments will be low which increases a buyer’s affordability! As an example, for every 0.0125 drop in interest, there is about a 2% increase in what buyers can afford! If you started out being able to afford a 100,000 home, you are now able to afford a home priced at 165,000! That is absolutely insane!
V Shaped Recovery:
As the demand for housing continues to increase, the economy will continue to recover. The recovery of the economy is assumed to be a V-shape at this point in time, and that is wonderful news for the housing market! After the economy started opening back up, home sales and new constructions began to increase!
Surprisingly, there has been an improvement in the unemployment rate numbers since the initial shut down. Statistically, the job force is opening up stronger than what was expected. The US Bureau of Labor Statistics released the latest update of Americans returning to work, and there was a significant increase in employment in the hospitality and recreation industry. We are estimated to jump “back into the swing of things” faster than originally expected.
With the economy working its way up, more people will feel comfortable in entering the housing market, and this is great news for buyers and sellers! With rates expected to remain low through 2023, the housing market definitely has a bright and steady future!