2021 Housing Projections – Rates, Shortages, Viruses

Housing projections for 2021 don’t appear to be jumping off any catastrophic cliffs.

According to a report issued by Redfin, there is not going to be a dramatic change in the real estate market, as long as inventory remains low, mortgage rates remain even lower, and the pandemic transitions into Q1 of 2021.

Clearly, retail businesses are going to dance along the precipitous cliff of a potential collapse, but food and shelter will continue to fuel our economy until such industries as travel, hospitality and entertainment regroup.

The inventory shortage is working to the benefit of homeowners. Landlords will struggle to cover costs with non-paying renters who are without work.

The unemployment rate is not good, but considering 2010, when the U.S. jobless rate was 9.6 percent, this is by far a less severe economic crisis. Back in 2010, 15 states reported annual average unemployment rates of 10.0 percent or more.

For October 2020, the unemployment rate decreased by 1.0 percentage point to 6.9 percent. That was the sixth consecutive month the rate has declined, but it was still nearly twice the February rate of 3.5 percent.

So it is totally plausible for Redfin to project the housing trajectory to continue well into 2021, based upon mortgage rates continuing at these levels through 2021.

They believe that the “hot housing market during the coronavirus pandemic could heat up further if more homes are put up for sale.”

The other invisible stronghold is that credit standards are still very high, which is in contrast with the Crash of 2008 and Great Recession.

In states such as New Jersey, there continues to be a mass migration to low density population regions, which have adequate access to schools, shopping and transportation.

The young city renters continue to flee the city, returning to their parents’ multi-bedroom houses, which have ample room for the new work-from-home economy that has been born.