With 2020 officially behind us, investors, buyers, and speculators all have their eyes on the horizon to catch a glimpse of what 2021 might bring to their local housing markets. Limited inventory, Low mortgage interest rates, and numerous buyers are creating upward pressure on the market. Let’s take a close look at what Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas home sellers can expect from the real estate market in 2021.
Low Inventory
It should come as no surprise that Spring 2020 put a dent in the average homeowner’s willingness to attempt moving into a new home.
Early on, we were all dealing with the unknown elements of COVID-19, and the potential consequences we all could experience. Due to the new uncertainty and constant need to adapt as time went on, a lot of homeowners opted to stay put and wait for things to calm down before putting their home on the market.
The unwillingness to dive into the market has led to a very limited selection of properties. In Westfield listing were down 13% compared to 2019. Buyers were less reluctant and fleeing to the suburbs resulting in Westfield sales increasing 22%. So the buyers were out but the sellers weren’t ready. This means, if you decide to put your home up for sale, it’s got the potential to attract more attention and offers than in other years.
Low-Interest Rates Drive Buyers and Refinancing
The Federal Reserve slashed and maintained incredibly low-interest rates throughout 2020 and has committed to the same policy in 2021. This is driving buyers into the market and pushing homeowners to refinance.
Low-interest rates increase homeowners buying power and is resulting in price increases. Consider this simple example:
The average 30 year fixed rate was on was 3.47% and is now 2.73%.
A 30 year $500k mortgage payment @ 2.73% = $2,035.91 – 9% lower payment
A $549,000 mortgage today has the same monthly payment as a $500,000 did on Feb 13 2020.
This provides a spectacular opportunity for buyers to spend a bit more now to save bundles over the term of their home loans.
Current homeowners are making the same calculation and refinancing. Granted, the savings from refinancing are dependent on the terms of the original loan mixed with a given lender’s refinancing fees, so the adjustment to interest rates did not completely remove all potential sellers but it makes it easier for them to stay in their home.
Prepare for the Home Buyer Rush to Continue
As we have acclimated to the new reality that set in through 2020, Many people’s comfort level with resuming more normal activities during the pandemic has grown over time.
We have seen things pick up rapidly as we enter the first few months of 2021. The would-be buyers that put things on hold and have been fortunate enough to save even more during 2020 will be coming back out with a newfound enthusiasm to meet that homebuying goal by entering the real estate market in 2021.
Demographics Are Shifting
One of the largest changes we saw amongst homebuyers in 2020 was Millennials coming out in droves to purchase their first homes.
It is estimated that Millennials were impacted less than most other age groups because of the stability of the service industry in the jobs market. Steady employment mixed with reduced expenses has given this generation an occasion to build up their savings and become the major purchasing block of the national housing market.
This means paying attention to the wants and needs of Millennials, who are marrying and starting families later than previous generations. The Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas offers close proximity to entertainment and shopping. This will help home sellers looking to attract this next group of flourishing buyers.
Guidance for Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas Sellers in the Real Estate Market in 2021
After the uncertainty of the past year, many home sellers are looking to get their properties ready to go on the market soon. If you’re looking to enter the real estate market in 2021, contact us today at 917-608-7277!