Higher prices, low inventory & rates inching up in 2021
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As we look ahead to 2021, it’s helpful to take a look at where we’ve been. Despite the pandemic, job losses, and a recession, 2020 saw an incredible surge in housing.
A steady drop in mortgage rates fed the surge, hitting an all-time low on December 24th as buyers scrambled to find a home they could afford. Mortgage purchase applications were up 26% over 2019, and refinance applications increased by 124%. Inventory continues to hit record lows, creating intense competition among buyers.
Market analysts predict that 2021 will be another strong year in housing. With vaccines rolling out, we’ll see the economy re-boot as businesses open and people patronize restaurants, attend sporting events, and start traveling again. Housing prices are expected to climb 8% in 2021. Interest rates are projected to inch up to 3%, a rate that’s still remarkably low.
Working remotely – a fact of life in 2020 – will fall off as employers call their employees back to the office. Even though a share of businesses will continue with some level of working remotely, market analysts predict that number to drop from a high of 21% in 2020, to 18% in 2021, and dipping to 12% in 2022.
Thinking of investing in a rental property? People who lost their jobs in 2020 will be on the move in 2021. Denver is likely to attract newcomers. The recession damaged people’s savings as well as their income, forcing them into a rental situation until their finances are more stable.
According to a forecast in the Dec 31st issue of Forbes, Denver is a good long-term bet for investors in rental property. Covid-vulnerable job losses in Denver in 2020 were at 3.3% (retail, restaurants, tourism, healthcare, and manufacturing), well below the national average of 6%. Jobs are the backbone of rentals. Denver’s numbers suggest a strong long-term demand from renters.
We’re available to help you sort out options and timing for selling or buying a home or investing in a rental property. We’d love to help. Give us a call. Wishing you a happy and healthy 2021!
Special thanks to the professionals at The Rueth Team for supplying market and financial insights and data.