Looking ahead to the U.S. housing market in 2021

For 2021, the consensus is that next year will be even hotter than this year. Investors expect the economy to recover from the epidemic-triggered recession, while mortgage rates remain at historically low levels.
Sales in the U.S. housing market are expected to grow 5% in 2020 from a year earlier, and more than 10% next year, according to a report released Tuesday by Real-estate consulting website Redfin.
“Even if the outbreak appears to be over, Americans will continue to buy homes to cope with their new lifestyle,” Redfin chief economist Daryl Fairweather said in the report. More homes are expected to be sold in 2021 than in any year since 2006.”
Although it predicts mortgage rates will slowly rise from their historically low levels of 2.7 per cent to about 3 per cent, the impact on financing will still be limited.
Eric Balog, CEO of Real estate firm LeverageRE, told China Business News that despite the pandemic and election uncertainty, the real estate market in major U.S. cities continued to perform surprisingly well in 2020. “I think that’s because buyers are still confident in U.S. assets and the investment environment,” He said.
Barlow said the general consensus is that under Biden’s leadership, COVID-19 is on track to be brought under control, and if that happens, the U.S. housing market rally could solidify in 2021.
Keller Williams also believes the U.S. housing market will do well in the coming years, largely because of the Fed’s low interest rate policy and a tight market. In California, in particular, he noted that the state’s recent passage of a bill allowing buyers over 55 to deduct land taxes, subject to certain conditions, and the failure of a bill to limit rents were two good news for investors.
The market isn’t risk-free, though. Tendayi Kapfidze, Lending Tree’s chief economist, cautions that while vaccines can restore social and economic normalcy, the labor market recovery is likely to be slow and incomes won’t quickly return to the upward path. Meanwhile, the number of permanent unemployed is rising; As the grace period ends, homebuyers will be under more pressure to repay their mortgages and lending standards are likely to tighten further, depressing prices in some areas.
CBRE, a US-BASED commercial real estate advisory services firm, expects the us economic recovery to accelerate in 2021 with widespread distribution of the Novel Coronavirus vaccine and additional government financial support. But the recovery in the commercial real estate market, particularly offices, retail and hotels, is expected to lag behind the economy, taking at least two more years to get back to where it was before the outbreak.

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