Housing trends are constantly evolving, and the industry has certainly seen its share of changes over the past few years. From record low inventory to rising interest rates to shifting buyer preferences, things look quite different, and we are not just talking about trending items like sliding barn door hardware. The rest of 2021 will bring some major changes as well, particularly in some long-awaited areas that may not be fully resolved until 2022 or beyond. This article will explore some of the biggest housing industry trends over the next two years, so you can get an idea of what’s coming down the pipeline and how you can prepare your business accordingly.
Housing Trends for Q1 of 2021
As we headed into Q1 of 2021, housing prices continued to climb across many parts of the United States. While a lot can change in a year, home prices were projected to continue on their upward trajectory as demand outstrips supply in some markets. As a result, homeowners will enjoy high property values even as they pay record-high taxes on them. In addition, more new housing is being built than before, which means there’s less pressure on existing homes that need repairs or renovations.
However, rising interest rates in Q1 will affects everyone in some way. While mortgage rates are still below historic averages, they’re set to rise by 1.4% over the previous average which could prove problematic for people who are just starting to look into buying their first home or refinancing an existing loan. It also means that if you do plan on getting a mortgage, it might be worthwhile to lock in your rate now before it rises further. This is especially true if you want to take advantage of 0% down payment options since higher costs mean less house you can afford outright. Furthermore, taxes on home sales are projected to increase by 3%, making it harder for families who want to move closer together or downsize as parents age and live longer.
Housing Trends for Q2 of 2021
During Q2 of 2021, a majority of real estate experts predicted a rise in inventory. Buyers will be able to find more homes for sale at prices that they can afford. Mortgage rates would hover around 5%, which means that rates won’t have to be as low as they are now in order to stimulate sales. Interest rates rising will be a net positive because it helps put downward pressure on home prices. The rate increases also make people take action sooner; there’s less incentive to delay if you know your interest rate is going up soon anyway. Inventory levels during Q2 aren’t expected to reach highs as we saw in 2017-2018 but they should gradually trend upwards over time until we hit normal inventory levels again by Q4 2022.
Housing Trends for Q3 of 2021
It’s important to note that there were several positive trends when it came to housing in Q3 of 2021. Interest rates remained low, wages increased, and overall spending increased as well. It’s too early to predict if these trends will continue into Q4 but they show a great deal of potential. Home sales increased by 10% year-over-year during Q3 and nearly half of homeowners say that they plan on buying their next home or refinancing within six months. Overall it appears that people are feeling good about their futures financially so they’re making more major purchases such as homes.
There is still a significant number of homes available for sale at very attractive prices – especially if you’re looking at newer homes – which is why many experts believe that once interest rates begin to rise again we’ll see another big surge in mortgage applications. The only real red flag comes from new housing construction. Some experts fear we may be facing another housing bubble as demand outpaces supply. If current trends continue, we could see some serious increases in new housing construction as builders try to keep up with demand. As with any industry though, no one knows what’s going to happen until it actually happens so we’ll just have to wait and see!
Housing Trends for Q4 of 2021 and Beyond
If we want to get a sense of what’s going on in housing, we should look at both supply and demand—how many new homes are coming online versus how many people (in terms of population growth) need them. Looking ahead to 2021, we can expect demand to increase by 2% nationwide. This is not surprising when you consider those Baby Boomers will be aging out of their home-buying years.
As they age into retirement, more Millennials will transition from renters to homeowners. It’s not all good news for potential homeowners though. Some experts predict rising mortgage rates could slow or reverse our expected housing recovery. While it remains unclear exactly where interest rates are headed, most economists agree they won’t stay low forever.