2021 Housing and Mortgage Trends

Predicting housing and mortgage trends can be a complex feat, and with the ongoing pandemic, the factors get even more complicated. In 2020, the pandemic pushed the U.S. into an economic downturn and brought with it high unemployment rates. In fact, in April of 2020 unemployment rates reached a record high of 14.7%

Most would think this would create a dip in the housing market. However, apart from a brief decline in the U.S. at the start of the pandemic, the housing market quickly picked up and housing prices soared as we witnessed mortgage rates fall.

2021 trends will involve even more complicated factors. Vaccinations are breeding optimism, yet states continue to roll back on restrictions. Mortgage rates are fluctuating and the housing market is as competitive as ever. 

As the pandemic presses on, you may be wondering if 2021 is the right time to buy a house. To help you on your journey, here are five housing and mortgage trends for 2021.

Mortgage Rates Could Remain Low

In early 2021, mortgage rates hit a new record low. You may be wondering if this trend will continue. 

Experts predict that rates may stay on the lower end but will edge up slightly as the pandemic subsides and the economy recovers from COVID. Others predict that rates will remain flat or even fall slightly

If the predictions for these mortgage trends are true, this is good news for home buyers. If mortgage rates remain low, purchasing power increases for buyers. A low mortgage rate also means lower monthly payments and more money in your pocket.

[Related: How COVID-19 Will Impact Mortgage Rates]

Home Prices Will Increase

Low mortgage rates usually mean higher home prices. Because mortgage rates have gone down so drastically in the last year, the prices of homes have risen because of increased demand. 

Following this housing trend, more people are looking to buy because of their increased purchasing power. It is also a great time to secure a low mortgage rate, which you can benefit from for years. 

Due to this high demand, the overall prices of houses will likely go up. It has been predicted that home prices will go up by almost 6% by the end of 2021. 

The housing market has been a seller’s market for years, and the pandemic has made this even more true. A seller’s market is competitive, with multiple buyers and raised pricing. The housing market trends predict that this high demand will continue to mean low inventory.

[Related: The Pandemic’s Effect on Housing Supply & Affordability]

Low Inventory

2021 housing trends show that inventory is down 22% this year as compared to 2019. People are being more cautious and sheltering in place due to the pandemic. As inventory went down, demand initially dipped but then began to soar again in 2020. 

In many places, the U.S. housing market is more competitive than it has ever been.

[Related: Seattle’s Current Housing Market]

Growing Suburbs 

One strong housing trend is that Americans are flocking to the suburbs. People are leaving dense, urban areas to find serenity after a chaotic year. 

People were already moving to suburban areas before the pandemic, and now the trend is seeing an even stronger upswing. Between April and June in 2020, as the pandemic was getting started, 7% more buyers chose suburban areas

More people are spending time at home due to the pandemic and many are even working at home. Families and individuals are seeing a need for home offices, gyms, yards, and more living space in general. 

Houses in the suburbs provide these options at more affordable prices. Furthermore, because people no longer had to commute in this time, moving further away where costs are lower became a possibility for many. Home sales in some small towns and cities even fell slightly during this time. 

[Related: Seattle Neighborhood Guide]

Increased Loan Limits 

One last mortgage trend to be aware of is the change in loan limits for FHA, VA, and conventional mortgages

In 2021, the loan limits have increased in most places around the country. Loan limits for one-unit properties will increase to $548,250 for most counties in the U.S. in 2021, compared to $504,400 in 2020. Furthermore, in high-cost areas, including Washington state, the maximum loan limit has gone up to $776,250 for one-unit properties. 

The increase in housing prices in 2019 and 2020 is responsible for this upswing in the loan limits.

[Related: Tips for Choosing the Right Loan Terms for You]

Talk to an Expert at Seattle Mortgage Planners

At Seattle Mortgage Planners, we keep a close eye on housing and mortgage trends. We understand the housing market and the uncertainty many buyers feel, especially during this time. It can be a stressful time to buy a property and take on a mortgage, but you can make the right decision for your needs during this time with professionals on your side. 

Contact Seattle Mortgage Planners today to talk to an expert — we’re here to help you navigate your options and determine whether 2021 is the right time for you to buy a home.

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