2020 was a whirlwind of events and turned everyone’s lives upside down. Although the housing market did not fall too hard due to COVID-19, there are some issues to come this year.
Remote work could mean more moves
With people still working from home with no end in sight, continued remote work could encourage more moves. Some businesses have made the decision to remain fully remote indefinitely which could mean more relocations in the next few months.
According to a survey put out by Upwork, 41.8% of Americans are fully working remotely. This is a major chunk of the American workforce. There could be many reasons for why people are relocating but working remotely gives another reason to move somewhere else. Workers may need a quieter place to work, more office space, or even a real office instead of a kitchen table. Workers often were only living in a set place due to their job but with the pandemic and working from home, they no longer have any ties to a specific place.
With the increased buyer demand, comes the inventory shortage. There simply is not enough inventory for the amount of people looking to buy. This comes from the halt of home building in the spring due to the pandemic. Because of the inventory shortage, the prices of homes are heavily increasing. Multiple bids are being put out for the same house which only increases the price.
According to research by Freddie Mac. Residential, to make it out of this housing shortage, 2.5 million additional homes will be needed. Now that is a lot of homes that need to be built but homebuilders are confident. With the booming of different residential areas across the country, the difference could be made up, but home builders will be really busy.
Low Mortgage Rates
Low mortgage rates make owning a home cheaper and have improved people being able to afford owning a home. With how low mortgage rates are at the moment, it is only driving demand in the buyer market. The home buying process came to a crashing halt when the pandemic hit but when real estate agents figured out how to safely sell homes, the housing market rebounded. This coupled with the millennials lining up to own homes, is a big part of why the inventory is falling short. According to Bankrate, As of February 2, 2021 the 30-year fixed mortgage rate is 2.840% with an APR of 3.150%. When looking at a 15-year mortgage rate, it is at 2.330% with an APR of 2.660%.