2021 Real Estate Market Forecast - Snohomish County - Will it Crash or Boom Again?
What the 2020 Real Estate Market Will Tell Us about 2021 - My Predictions
Will it crash or boom again?
Snohomish County Housing Market
January 2021
Nicole Serviss, RE/MAX Elite
Despite the tumultuous year, the housing market saw a large boom in 2020. We had a short pause in the spring when the lockdowns first began, but the year ended with record breaking sales.
Sales continue to rise along with house prices. Millions of people throughout the country were laid off or furloughed, but it didn’t stop the house hunters from buying homes.
Home prices had already started to rise before the pandemic, but the pandemic created a rapid acceleration. We saw the average home prices increase by 15% in some areas of Snohomish County going from $554,879 to $630,769 in 2020.
Even Zillow is prediction a strong real estate market for 2021. Even with the large boom in 2020, they are still expecting to see a 10% growth in prices in 2021.
Why the huge increase in prices? LOW INVENTORY.
We don’t have enough homes for sale. This makes for more competition between buyers to WIN the house in a bidding war, driving prices up.
Should we expect the same growth in 2021?
Yes and no. We will continue to see home prices rise, but a little more slowly.
Does this mean you should wait for prices to drop before buying a house? No. We probably won’t see prices drop this year.
Interest rates are still very low so you can get more house for your money because it is so cheap to borrow right now.
Love a good visual? See the graphs below showing 2020’s data.
Median Sales Price —— Increased over the course of the year.
Homes for Sale —- Increased at the start of the year and then rapidly declined to where there are hardly any houses left.
Median Price Per Square Foot —- Increased. You are getting less house for your money.
Interest Rates — Why They Play A Big Role
Checking out the chart, you can see how rates have continued to decrease over the course of the year (minus this little dip here as we get into January). Will they continue to rise or go back down?
Election years always produce nice low rates, and 2020 was no exception.
For now, rates are still really low and give you, the buyer, more power to purchase a higher priced house while still keeping your monthly payment affordable.
“Some economists forecast that rates will break the 3% range in 2021, but not rise much higher than 3.1% to 3.3%.
The Mortgage Bankers Association (MBA) says it believes the average rate for a 30-year mortgage will start at 2.9% in the first quarter of 2021 and gradually increase to 3.2% by the end of 2021.” Source, Forbes.com
How does this affect you?
If you’re a home seller—This means you have a lot of buyers that can leverage more buying power because their monthly payments are much lower at this rate than the rates last year.
If you’re a potential buyer—You can use this time to borrow money and even though home prices have risen, your monthly payment might not because of these low rates.
FAQS
Why have prices increased?
When you have a low number of homes for sale and a high demand for homes from buyers, you get buyers competing with each other to win. One of the best ways to do that is to offer to pay more money. Every time this happens, this helps the next future house sell for more as well because the overall value of the area increases.
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