Will The Housing Market Crash In 2021
Will The Housing Market Crash or Boom In 2021?
The year 2020 brought us many things: a pandemic, a shortage of toilet paper and a booming housing market (among other things). Even though we’ve welcomed in a new year there are still some things that we’re all a bit unsure about. Namely, the pandemic and toilet paper. Though if there’s one thing we can count on in 2021, it’s that the housing market is looking like it’s going to hold strong.
With many of us working remote, we’re spending more time at home than ever before. Many buyers are looking for homes with offices and enough room for a work-home life balance. Working remote has also allowed for more relocations (friendly reminder that Katy is a relocation specialist!). And because of higher demand, prices have increased as the market has become more competitive due to lower inventory. So what’s a hopeful home buyer to do?
If you’re wondering what to expect out of the housing market in 2021, or considering buying or selling this year, then keep scrolling because we’ve got the scoop on Bakersfield real estate.
Table of Contents (click to jump to the section of choice).
2021 Mortgage Rates
You’ve probably already heard that mortgage rates are at an all time low - historically low, actually. Mortgage rates are currently are hovering in the low 2’s or low 3’s depending upon your credit score. While rates will eventually rise (as one can only expect from the ebb and flow of the market) the good news is that rates are expected to hold steady in 2021. It’s basically free money.
If you’re waiting for real estate prices to drop in order to cash in on both a low ticket price and a low mortgage rate, we’d encourage you not to. Keep reading to know why.
2021 Real Estate Prices
In 2020 we saw real estate prices increase and it doesn’t look like that will be changing in 2021. When there is a low supply and high demand, there’s bound to be a give and a take. The “give” here is that mortgage rates are low. The “take” is that ticket prices are higher.
This is when you might be thinking that if prices are higher, then it’d be smart to wait it out and then take advantage of both the low mortgage rate and the low ticket price. Earlier we encouraged you not to and here’s why. The market will constantly fluctuate and there is rarely a “perfect” time to buy or sell. The most we can hold out for is a better time to buy. That time is now.
Eventually we’ll see a flip flop of our current market. Home prices will drop and mortgage rates will increase. At which point you’ll be paying a higher interest rate in exchange for a lower ticket price.
There’s no need to be fearful about current real estate prices because when combined with a historically low mortgage rate, it’ll all come out in the wash.
Buying a Home in 2021
Even though real estate inventory is low, that doesn’t mean there aren’t homes to buy. It means that buyers have a greater opportunity to put their best foot forward and it’s more important than ever to work with a real estate agent that’s in the know.
If you’re a first time home buyer and have questions about the process, click here for insight in preparing to buy.
Only strong offers will be considered by sellers and many homes are going above asking price and have multiple offers. A good real estate agent will guide you in producing a solid offer and in negotiating the sale.
It’s also important to note that low inventory also means it might take a bit longer, or a few more tries, to find a home you love. Being aware of this when you begin the process helps to conserve patience and manage timelines.
New construction is definitely helping to offset some of the load and we’ve helped a few clients this past year in buying new construction. It’s a good idea to work with a real estate agent even when buying new construction because we can help you navigate the process, especially if you’re a new home buyer.
Are you a pre-approved buyer or a seller that’s ready to list your home? Drop your contact information below and we’ll give you a call or email.
Pre-Approval and Escrow
The pandemic has brought some slight changes to the process of buying a home. Before Covid, it was important to a have a pre-approval letter at the start of the home buying process. Now, it’s an absolute must to have a pre-approval letter from your lender before you can begin viewing homes.
In this environment, sellers only want pre-approved, serious buyers in their home in order to limit the amount of physical interaction and to streamline the viewing process. If you’re looking for a lender to work with, reach out to us for a list of Bakersfield lenders that we recommend.
Once you have your pre-approval letter, you’ve viewed homes and your offer has been accepted, it’s time to start the escrow process. As always, the lender verifies the buyer’s employment. However, due to an increase in job loss and layoffs this past year, lenders are double and triple checking the buyer’s employment throughout the escrow process. There’s a much more watchful eye because they want to make sure you still have a job by the end of escrow.
It’s also worthwhile to note that many home owners are working with lenders to refinance their home. Lenders are much busier right now, which could result in some delay and slower response time. This doesn’t mean anything is wrong, it just means things are much busier and a bit of patience goes a long way.
Listing Your Home to Sell in 2021
Homeowners, if you’re thinking of listing your home and are waiting for Spring, don’t! Potential buyers that did not buy in the previous year usually begin looking at the beginning of the year for new listings. It’s a great time for you to list your home without having to wait months for Spring.
If you’re concerned about curb appeal, there are Winter flowers you can buy from your local hardware store that will add pops of color and warmth to your home. We also recommend that you have us out to look at the home before you list so that we can give suggestions on anything to repair or spruce up. This goes a long way in getting top dollar for your home. Check out our blog on how to prepare your home to sell.
It’s also worthy to note that due to the pandemic there could be a shortage of a repair part or labor if something needs to be fixed or replaced. This may not be the case for you and there might not be any repairs to make. Either way, it’s a good idea to be prepared to add some buffer time to escrow just in case it takes longer than expected.
Safety Efforts
Before viewing a home the real estate agents, buyers and sellers are all required to sign a Covid entry disclosure. Not to mention the standard mask as well as physically distancing and avoiding physical contact such as shaking hands. In some cases, it might be asked of the buyer to allow the kids to stay home to limit the amount of people viewing the home. If you’re uncomfortable viewing the home in person, click here to read how we offer virtual home tours and what to expect.
Conclusion
There is a lot of opportunity to be had in this market for both buyers and sellers. If you’re curious about your options, it doesn’t hurt to start the pre-approval process and begin working with a Bakersfield lender. If you need recommendations, send us an email and we’ll be happy to help.
If you’re a seller that’s ready to list, or a buyer ready to view homes, don’t hesitate to reach out!
We’re with you for your next adventure.
-Katy & John
Sources
Forbes: Experts Predict What The Housing Market Will Be Like In 2021