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According to the latest CoreLogic Home Price Insights Report, nationwide home values increased by 8.2% over the last twelve months. The dramatic rise was brought about as the inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. As CoreLogic explained:
“Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply.”
Where will home values go in 2021?
Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.
According to the National Association of Realtors (NAR), the current number of single-family homes for sale is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 with approximately 270,000 fewer homes for sale than there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1. As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2. Some households impacted financially by the pandemic will be forced to sell.
Low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. Today, we’re starting 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason why demand is expected to remain high throughout the new year.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts:
There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that home values in the country will continue to appreciate.
8.9 Million People Relocated Since the Beginning of the Pandemic
2020 will go down in history for a pandemic that changed the world. No one would ever have imagined last year that we would stay home for social distancing in order to help save lives. Specifically, one in three adults substituted some or all of their typical in-person work for telework compared to 1 in 20 adults that worked remotely before the pandemic. With teleworking at record high levels, people also decide to move for various reasons. Some of them seek out bigger houses with bigger yards for their kids to play in and office space for them to work. Others seek more affordable homes in less dense places away from large city centers since they can telework.
While teleworking may continue long after the pandemic, it is obvious that far fewer people are moving for job-related reasons during the pandemic than they used to do pre-pandemic.
To better understand the COVID-19 impact on U.S. mobility, we collected United States Postal Service® change-of-address data from March to October 2020 for each county across the United States. Since people who want to forward their mail from their old home to new residences file a change of address request to the USPS®, this dataset serves as a good proxy on how many people moved since the beginning of the pandemic.
Most people moved in the beginning of the pandemic and during the summer months
As of October, 8.93 million people relocated since the pandemic started. This is an increase of nearly 94,000 people changing the address of their residence compared to 8.84 million in 2019 during the same period (March through October). Breaking down the data by month, most moves during the pandemic occurred in March, with 1.23 million people relocating compared to 1.00 million a year earlier.
While Texas and New York had the highest moving rates, the chart below shows where most of these movers relocated during the pandemic. For instance, more than 50% of those who left New York moved to New Jersey followed by Connecticut (12%). Respectively, the top three destinations for Texans during the pandemic were Arkansas (16%), Florida (13%) and New Mexico (9%).
July 31, 2017
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