Following a long pause at the start of the coronavirus pandemic, the real estate market has emerged as a bonanza for sellers and a challenge for buyers. Strong housing demand coupled with low supply is leading to fierce buyer competition and rapid price growth for homes. Mortgage rates that are at near historic lows are also playing a key role in this trend. Read on to learn more about housing market trends for the year to come.
Home Prices are Forecasted to Move Upward in 2021
As the world recovers from the coronavirus pandemic, home prices are soaring. Alongside record-low mortgage rates, buyers who delayed purchasing a home because of the pandemic, plus those who need more space to accommodate working from home, are driving the demand for homes. In addition, more millennials are entering the housing market this year, driving home prices even higher.
In most real estate markets, experts predict strong housing demand coupled with a short housing supply will continue to push prices up. In fact, economists at Federal Home Loan Mortgage Corporation project that home prices will rise by 6.6 percent in 2021.
Mortgage Rates are Projected to Rise Slightly in 2021
In 2020, the Federal Reserve lowered the federal funds rate — the benchmark for most interest rates — to record-low levels with the goal of boosting the economy, which was crushed by the coronavirus pandemic. Mortgage rates hit their lowest levels in 45 years as a result of federal intervention. According to the Federal Home Loan Mortgage Corporation, or Freddie Mac, the average rate for a 30-year fixed-rate mortgage was 3.00% as of May 20, 2021. This was an increase from the average rate recorded on January 7, 2021, which was 2.65 percent.
An increase in consumer confidence and spending, among other temporary factors, are pushing mortgage rates higher. According to experts, mortgage rates may continue to rise modestly throughout 2021 but should remain in the low 3.00% range for the year. It would therefore be wise to buy a home while mortgage rates are at record-low levels.
Looking For a House in Bucks County, PA?
If you are interested in homes for sale in Bucks County, PA, the Joseph Bograd Real Estate Team can help you find the right home. Call us today for more information about houses for sale in the Greater Philadelphia region.