Ivy Zelman of Zelman and Associates weighs in on how this market mismatch with affect 2021.
There is no question that there’s a huge demand for more housing, especially in suburban neighborhoods, further away from expensive cities, but data shows that “urban flight” has been in full force since 2012. And, the demand for single family homes is being driven by married people with at least two children.
What the pandemic did do was increase the value of most homes, as more people looked to move into something that would accommodate a “work from home” office, outdoor dining space, and both home theaters and gyms.
“Homes appreciated on average 9.7% in 2020, and we believe they will continue to rise in the low inventory market. The current housing market has remarkable velocity,” says Ivy Zelman, CEO of Zelman & Associates.
Data is showing the housing market will not be cooling down in 2021. Experts studying it believe homes will continue to appreciate an additional 6% maybe more this year, if mortgage rates stay low. Fannie Mae says mortgage rates are the number one factor in the current surge of home buying. Data shows refinancing homes is up more than 100% since the pandemic began.
Builders will stay in high demand in 2021, as they look to build in more rural areas where there is space for more housing communities. However, if mortgage rates increase, affordability will decrease, causing the housing market to cool.
