Despite elevated unemployment and weaknesses across the broader economy, the real estate market weathered 2020 with surprising strength. Consumer confidence is rising, historically low interest rates continue to drop and we’re seeing competitive offers across price points. All of this, combined with the arrival of the COVID vaccines, paints a rosy picture for the 2021 real estate market.
Closings and home prices are at record-setting highs.
According to the California Association of Realtors, we just closed out the month of November with the highest level of home sales in nearly 15 years. “This was also the first time existing single-family home sales rose above the $500,000 benchmark since January 2009.”
What’s more, prices continue to rise by double-digits annually. This amidst competing, multiple offers, and with very little by way of price discounting.
Pending sales are also driving confidence.
In addition to the strong closings numbers, pending sales remained above 2019 levels by double digits again last month. “As a result, home sales, which were already 1.3% higher than last year through the first 11 months, are likely to rise above 2019 levels even more (in December).”
As a result, the C.A.R. is revising its 2021 forecast, predicting sales will be up by mid-single digits next year.
Historically low interest rates are driving demand.
According to the latest Freddie Mac survey, “Rates hovered at the all-time low level of 2.71%” for the second week in a row. And these low rates are paying dividends. First time homebuyers are entering the market at the highest level in a decade.
Low rates of course are also enabling work-at-home buyers to expand their housing choices, both spatially and geographically.
Showingtime.com’s index of private showings provides further proof of the incredible demand in the market. California is “more than 92% ahead of the pre-pandemic peak, and more than 155% higher than during the same point in 2019.”
Encouraging news out of Washington.
Several key programs are set to expire as relief talks resume in D.C. Although the details are still being finalized, there is likely to be an extension of expanded unemployment benefits, more small business loans, and perhaps most importantly, rental relief. All of this will serve to stimulate the economy writ large in 2021.
In short, historically low interest rates make this a uniquely advantageous time to buy, and incredible demand makes this an optimal time to sell. The real estate market is strong, and there’s every reason to believe that will continue well into 2021.