The effects of Covid-19 have had a far-reaching impact on so many sectors of the economy, leaving many people who were on the cusp of buying a home wondering if they still have a shot at buying one. At the Potempa Team, we understand! We’re helping home buyers just like you find the best forever home in the Arizona market. Here’s our assessment of the 2021 housing market, and what you can expect.
The Upside Of the 2021 Housing Market
Despite stay-at-home orders and iffy employment, the housing market in 2020 was surprisingly strong. An uptick in virtual tours may have made it easier for potential buyers to find the right home, and people with more time at home may have had more opportunities and felt more confident with virtual shopping. Expect online browsing and virtual tours to continue. In fact, as of the first week of December, home purchase loan applications exceeded 2019 levels for 29 straight weeks, and the cumulative totals also surpassed 2019 levels. Despite many people adjusting to furloughs or work-from-home changes, many lenders are still approving mortgages at a brisk rate. Both new and existing home purchases were higher in 2020 than at any time since the 2008 housing market crash and the Great Recession.
2021 Housing Market Tailwinds
The momentum from 2020 is expected to carry into 2021, called the “Tailwinds” phenomenon. There are a few reasons why the outlook for 2021 is positive.
Low mortgage rates
The forecast for a 30-year, fixed-rate mortgage in 2021 is 2.8-3.3%, which are historically low rates. The market for April through October 2020 was a significant driver for these lower rates. Low rates keep purchase demand strong and increase the number of people buying.
Burgeoning purchasing demographic
Millennials, a powerful buying generation, have been delaying purchasing a home, due to a stagnant job market 10 years ago and a more cautious outlook towards a major purchase. This group comprises about 72 million people and is the largest and most educated group in US history. As this generation begins reaching their 30s, they’re entering into prime home-buying years, and are in a better position to buy. In fact, more than half of all loans from Freddie Mac and Fannie May were for first-time homebuyers in 2020.
Higher savings rates
One result of many Millenials delaying home buying has been an increase in personal savings, which reached an all-time high in April 2020 and remains strong moving into 2021. Aside from the savings patterns of Millenials over the last 10 years, the decrease in spending discretionary income, such as going out to eat, seeing movies, and even just shopping at brick-and-mortar stores, has contributed to the higher savings rates. Larger savings can be used as a substantial down payment, which typically is the biggest challenge for first-time homebuyers. However, once this hurdle is overcome, many people are finding home buying easier than they thought.
Ready To Get Started?
Whether you’re a first-time buyer in Arizona or you’re looking to upgrade or downsize, the Potempa Team has you covered! We have a deep understanding of the Arizona market, and we can work with you every step of the way to find the perfect fit for you and your family. Give us a call or visit us online to browse our listings. We can’t wait to get to work