Tag - housing market 2021

What to Expect from 2021 Housing Market

It’s safe to say there will not be a lot of people sad to say goodbye to 2020. With new vaccines being developed it seems the days of the pandemic will soon be behind us, while it seems the increasing home prices may be here to stay. The demand for housing and the housing market are expected to remain strong in 2021. Prices are expected to decrease through the spring and summer, and then gradually increase toward the end of the year. Sales of existing homes are projected to increase 7% in 2021. This increase is expected to come from younger millennials who are competing with older members of Generation Z for starter homes, baby boomers who are looking to downsize and many renters are seeking to buy their first home. The demand is being fueled by mortgage rates at record lows, and from the pandemic making many households realize they need more or different housing than what they have needed in years past. We just finished helping a family buy a new 4,400 sq. foot home who was in this same boat. Their previous home was 1,800 sq. feet which was perfect when they bought it 5 years ago. At the time they bought it, it was just them with a baby on the way. Now they have 2 kids and thinking that there could be one more. Prior to the pandemic they felt their house was cramped, but they were rarely in it and it did not bother them that bad. The husband worked days at an office and the wife is a nurse who works nights. The pandemic shifted their life. The husband is now working from home in a cramped corner of his bedroom and kids running around everywhere. Their weekends are spent at home stepping over each other all day instead of being out and about. They decided it was time to sell and buy a new house. They found a bigger house for sale in their neighborhood because they didn’t want to leave their neighbors. They went under contract and then listed their 1,800 sq. ft. house which sold in a couple of days. Their 1,800 sq. ft. house was the perfect starter home for them. They quickly outgrew it but continued living there due to convenience. The pandemic changed everything, and it was no longer convenient to stay in the cramped space. They love their new 4,400 sq. ft. home. They love that they were able to stay in the same neighborhood. They love that the kids have their own play area, and they are no longer stepping on toys throughout the entire house. They also feel with the extra space they can get more serious about having baby #3. If 2020 taught us anything it is that everything can change in an instant. There is only so much we can make predictions about for the new year. If you are in the same situation where your house used to fit your family and lifestyle but due to the pandemic you have quickly realized it does not due to not having a dedicated home office or enough space to stay sane with everyone being in the home, give us a call.

Biden’s Proposed Tax Credit Could Drive up Home Prices

President Elect Joe Biden has proposed a $15,000 tax credit to help first-time homebuyers purchase a property. The proposed First Down Payment Tax Credit is meant to help families offset the costs of homebuying. Buyers will receive the tax credit when they make the purchase instead of waiting to receive the assistance when they file taxes the following year. The National Association of Realtors Chief Economist Lawrence Yun responded to the proposed tax plan by saying that the $15,000 tax credit is good news since it can go a long way in terms of helping first-time homebuyers and minority households. However, this is only one part of the solution. Although this plan seems like a good path to take to increase homeownership in America, there are also dangers to the tax credit. “The full story is that stimulating the demand just by itself is insufficient,” Yun said. “The $15,000 will certainly help the possibility for the potential first-time buyers, but the only way to make that impactful is to ensure that we have sufficient supply available as we go into 2021.” Yun fears that Biden’s proposed tax credit will add more fuel to the housing demand without addressing the lack of supply. Which could result in home prices accelerating much higher; partly negating some of the benefits of the $15,000 tax credit. Currently we are experiencing a historic home shortage and record-low mortgage rates are pushing prices to new heights. The housing supply shortage continues to get tighter as not enough homes are being built to face the demand from buyers. “If we add further stimulus to the demand without addressing the supply… it will simply bump up the prices even higher.” As we move forward into the new year it is important to be cautious that this tax credit could drive home prices higher. If you are wanting to get ahead of this tax plan now is the time to act. Contact us today to discuss your options for a home purchase.