2020 was a challenging and very extraordinary year. First, because of the COVID19 pandemic, then the political division in almost every part of the world and the economic downturn that is still present up to this very moment. Many lives have lost, as well as livelihood; businesses shut down, jobs lost. It was a year of depression and fear for many of us.
One of the industries that is badly hit by the current global problems is real estate. In the past, spring was usually considered the hottest season for real estate, but home sales was disrupted in the spring of 2020. Health concerns and stay-at-home orders forced buyers to reduce their home-buying activity.
But towards the end of 2020, the market quickly made an impressive rebound. Real estate experts have reported that the surge in home sales made up for the spring market losses.
What lies ahead for the real estate market this 2021? Will there be more better results to look forward to? Here are a few things to expect in real estate this 2021.
Slim pickings due to incredibly low inventory.
Inventory was down 22% in November 2020 compared to the previous year. There were not enough houses for sale over the year to meet buyer demand. Low inventory means the best homes will likely be snatched up fast and you need to be perceptive when you go house hunting. Slim pickings, however, might be an advantage for sellers as low inventory means low or less selling competition.
Rising home prices.
In November 2020, existing home prices grew by 15% compared to last year. For the buyers who are going to buy a home in this expensive market, you must find out how much house you can really afford. To help you in setting your goal and stay within that budget, you might need this online mortgage affordability calculator. It’s so easy to use, you just have to provide the correct values such as the following :
Your Gross Annual Pretax Income and your Spouse’s After-tax Income – Two heads are better than one, so if your income is not enough for the house you want to buy, you can always combine your and your spouse’s income.
Down payment – You should at least secure 10–20% down payment. To avoid PMI – an extra fee added to your mortgage to protect your lender in case you don’t make payments, you need to pay 20% down payment or higher.
Term of loan – It can be up to 30 years, but the longer you pay for the mortgage may mean keeping you in debt for decades and charging you with so much interest and fees.
Home ownership expenses such as Annual real estate taxes, Annual homeowners insurance, Monthly HOA fees.
Monthly debt services such as Vehicle payments, Credit card payments, Student loan payments, and Other monthly debt payments.
For other values such as the DTI ratio limits, PMI and the annual interest rates; you may leave them as is.
The result will show how much would be your maximum monthly mortgage payment based on the term you chose. It will also show the Front End and the Back End maximum monthly payments. These figures will give you an idea how much money you have to save so you can buy your dream house. Seeing the scenario created by the calculator can somehow give you confidence in buying a home amidst this pandemic.
These are only a few real estate trends this year. Although the industry was greatly affected by the unfortunate events in 2020, it is definitely far from crashing. It creates and adapts new ways and it will continue to thrive on change this year and beyond.