As we all look toward new beginnings in 2021, it seems that the bidding wars and above-asking-price offers that have defined the recent housing market are here to stay. Pent-up demand from homebuyers who took a holiday break will fuel January sales, and it will be a great time for first time home buyers to seize the opportunity on buying a home in the New Year.
Low-interest rates will also continue through the first quarter of 2021, which may see potential sellers take advantage of attractive refinancing offers in lieu of putting their homes on the market. The result: inventory constraints across in-demand suburban single-family markets. The good news that the record low mortgage rates are pushing many prospective homebuyers off the sidelines and into the market. Homebuyer sentiment is sanguine and purchase demand shows no real signs of waning at all heading into next year.
Interest rates are not expected to reach above 3.4% in 2021. The Federal Reserve has made clear it does not want to remove its monetary stimulus too quickly and originators have added capacity; both of which should help keep mortgage rates from rising too quickly.