While we cannot anticipate everything that will happen in 2021, the real estate market history and how our economy responded to pandemic challenges are good indicators of what lies ahead. The Huntsville and national real estate markets exceeded expectations during the second half of 2020. The good news for local buyers and sellers is experts believe the economy is recovering and the year will maintain an upward trajectory.
The economy recovers–but slowly
- 2021 will usher in a slow but steady recovery toward a normal economy. Most experts believe 2021 will be a slow climb, with 2022 being the year we truly see an acceleration back toward typical markets.
Timing the economy’s recovery
- When the acceleration in recovery occurs partially depends on how the vaccination rollout unfolds in the months ahead. The current government’s projections have the vaccination becoming available to the general public by summer 2021. For that reason, some experts believe our economic recovery will accelerate in the second half of the year.
Low interest rates persist
- The Federal Reserve has indicated it intends to keep interest rates low to help stimulate the economy during the year. The Fed also believes the second half of 2021 will experience stronger economic gains than the first.
- The Reserve’s move to keep interest rates low and buying government-backed bonds should trickle over into mortgage rates should also remain low. Bankrate’s Chief Financial Analyst believes the first few months will see persistent low mortgage rates before starting to rise in the second half of the year.
- Low mortgage rates encourage first-time homebuyers, real estate investors, and other homeowners to make purchasing decisions. The early months of 2021 will likely offer better rates, but the year should end with mortgage rates still historically low. 2021 will be an excellent year to finance a home purchase.
Low inventory persists
- The year begins with Huntsville and the greater North Alabama local real estate market, maintaining a low inventory and high buyer demand trend.
- Median prices have been rising for months and are anticipated to continue in the months ahead. According to Valley MLS, single-family home prices in the Huntsville metro were up 14.1% compared to 2019.
Housing needs are shifting
- The pandemic led to homeowners reassessing their housing needs. Remote work is expected to continue as more businesses re-evaluate their office space and in-person work requirements.
- As a result of this shift in how we work, professionals are rethinking where they want to live, work, and play. Why live in a dense urban environment when you no longer need to commute to work every day?
- Homebuyers can get more home and space by moving into rural and mid-sized cities. These include Huntsville, which was named one of the most affordable cities in the nation. Expect sustained migration from large metropolitan areas into our area.
Buyer demand’s impact on median prices
- Early signals indicate high demand for Huntsville homes will persist through 2021. Sellers often receive multiple offers and higher prices. Low mortgage rates will encourage buyers to keep looking for their ideal home.
- As the year progresses, increasing median prices should start to temper. Lawrence Yun, Chief Economist for the National Association of Realtors, says, “supply will rise based on the higher number of housing starts of single-family homes. This will give consumers more choices, and more importantly, will tame home price growth.”
- However, Yun also noted that more affordable metro markets and suburbs could witness higher demand than dense metros and downtown areas.
Interest in new construction homes
- Another possibility: low inventory may increase interest in new construction properties. Robert Dietz, senior vice president and chief economist, National Association of Home Builders, predicts demand for new construction will persist into 2021, even if it is not at the same pace as 2019. Construction will be essential to meeting buyer demand.
Technology in the transaction
- There will also be increased use of technology to assist with the real estate process. Amanda Howard Sotheby’s International Realty has always been on the cutting edge of real estate technology. We utilize tools to support our clients’ real estate needs, whether they live in Huntsville or are moving into the area for the first time.
Buying or selling your Huntsville home in 2021
- To have the smoothest experience buying or selling in 2021 will take a local expert. Many home sellers are receiving multiple offers on their properties due to high buyer demand. Specific price points are highly competitive in the Huntsville market. Homebuyers need someone to get them in the door first and help make their offer the most attractive.
Whatever your real estate needs in 2021, trust in Amanda Howard Sotheby’s International Realty to serve as your Huntsville area experts. Please reach out to us with any questions about buying or selling a home in the greater Huntsville area.