The housing market has undergone a surprising amount of growth this year, considering the many difficulties caused by COVID-19 and an economic downturn. However, as the market enters a new year, many housing experts are providing insight into what changes may be expected in 2021.
Refin’s predictions for housing market changes in the new year appear optimistic overall, with one especially encouraging forecast. According to Redfin, there may be more home sales in 2021 than in any other year since 2006—shortly before the Great Recession.
This year, the demand for homes was strong and prices skyrocketed, but next year is expected to have even more growth in home sales. Redfin reports that “annual sales growth will increase from 5% in 2020 to over 10% in 2021.”
The possibility of COVID-19 recovery could be the driving force that pushes these home sales next year. The power that decreased coronavirus cases could have on home sales has already been exemplified in areas that have the fewest number of cases, which are experiencing “60% faster growth in the number of people listing homes for sale than areas with the most cases per capita.”
Redfin previously published a report on how a successful fight against COVID-19 could further boost home sales. With the potential distribution of a COVID-19 vaccine not far out of reach, this could likely lead to an uptick in buying activity in the housing market.
Redfin also predicts that there will be more new homes built in 2021 than in any other year since 2006. The increase in new builds is another major factor that could promote more home sales next year.
The high cost of building materials has been a roadblock in recent years, however, there has already been a rise in new home constructions in 2020. According to Redfin, “building permits were up 21% from September to November,” when compared to this same time period in 2019. This year’s extremely low interest rates have also enabled home builders to “borrow more cheaply for their projects,” thus reducing the cost burden of building more homes.
View more of Redfin’s projected housing market changes for 2021 here.