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A Peek Into the 2021 Housing Market

November 9, 2020

5 MINUTE READ

Who’s ready to skip straight to the new year? If so, you’re not alone. In light of all the difficulties and disruptions of 2020, it seems like everyone wants to fast forward to 2021, leaving the coronavirus far behind us.

Those of us with our eyes on the real estate market are prospecting 2021 with less restlessness and more curiosity. The biggest question on everyone’s minds is what will happen to the housing market next year?

While it’s impossible to precisely outline the upcoming year and the fate of real estate in 2021, we can use today’s data to form a promising forecast for what will unfold in the coming months.

Reali is rounding up what the experts are saying about the near-future of the California housing market. Here’s what we can all expect next year for California buyers and sellers:

What the Experts Are Saying

We’re sharing what Reali agents are experiencing in California and highlighting stats from the California Associate of Realtors (C.A.R.), who just released their predictions for the 2021 housing market. These are the five key factors projected to unfold in California’s real estate market next year:

An Uptick in Single-Family Home Sales

C.A.R. is confident that the state will see an increase in existing single-family home sales in 2021. The year-over-year gain is expected to reach 3.3%, with the total number of sales in 2021 reaching 392,510. The anticipated number of single-family homes sold this year, in 2020, was only 380,060.

Earlier this week, Reali Broker Roger Cummings shared that according to C.A.R., weekly closed sales remained unseasonably strong through the end of October, and the forecast calls for even more home sales in 2021, hitting the fastest pace of sales in five years.

A Continued Increase in C.A. Home Values

2021’s median selling price for homes in California is forecasted to increase by 1.3%. The average selling price for C.A. homes is expected to reach $648,760 in 2021. This pattern of increased pricing has been steadily occurring for the past few years. 2019’s median price was $592,450, followed by an 8.1% increase in 2020’s $640,330 average.

Promising Buyer Pool

The market recovery uncovered an eager pool of buyers who have been snagging C.A.’s available listings for months. Record-low interest rates paired with the release of pent up demand has resulted in a highly competitive pool of buyers.

“An extremely favorable lending environment and a strong interest in homeownership will continue to motivate financially eligible buyers to enter the market,” said C.A.R. President Jeanne Radsick.

Longstanding Inventory Lows

While buyers have been enthusiastic about diving into the post-pandemic housing market, sellers remain hesitant. The national housing supply has been low, and the constricted inventory is anticipated to continue in California into 2021.

However, evolving seller sentiments are expected to disrupt the decline in available houses. More and more sellers are gaining the confidence to list their homes, slowly balancing out the inventory.

Slow Growth, but Growth Nonetheless

Ultimately, the experts are expecting 2021 to be a year of growth – but don’t expect those gains to happen immediately. Contrarily, experts are calling 2021 as a slow climb upwards.

“An extremely favorable lending environment and a strong interest in homeownership will continue to motivate financially eligible buyers to enter the market,” said C.A.R. President Jeanne Radsick.

The Right Now

Now that we’ve laid out the future, let’s regain our bearings on the ‘right now’ moment.

Where are homes still available… and affordable?

While housing inventory is still tight, right now Los Angeles is the place to shop for abundant and well-priced homes. The California listing inventory is the highest in Los Angeles, and L.A. homes are most affordable, too.

The second most promising D.M.A. for buyers is Sacramento, which has a healthy inventory of well-priced homes. Buyers looking for higher-priced homes can explore the Bay Area. San Diego currently has the most competitive market.

I want to buy a home, what should I do?

Buyers who want to buy a home should start planning their strategies. Location will play a major role in the market as the statewide trend of suburban relocation gains momentum. Keep an eye on the housing market, get your financial house in order, and find an agent so you’re ready to pull the trigger.

But, the good news is that the borrowing conditions will remain strong into the new year. 2021’s anticipated interest rate is expected to hover around 3%.

I want to sell my home, should I do it now or after the holidays?

The holiday season is typically when sellers avoid putting their homes on the market. But, sellers may want to rethink following that advice this year – 2020 is different.

Instead of waiting, sellers should take advantage of today’s special circumstances that are re-writing the norms of real estate cycles. Now is a great time to sell a home in California. Buyers are looking for homes today, and waiting until after the holidays increases the likelihood of competition.

In the same way that buyers stalled throughout the pandemic to flood the market all at once, sellers who have been holding off on a sale will be listing their homes during 2021’s cooling off period.

Want to take the discussion further to cover your specific questions? Get in touch with the Reali team and get started today!