A recent survey of over 20 economic and housing experts by the National Association of Realtors brought up some predictions for the housing market and the economy in general in 2021. The survey, making up the 2020 NAR Real Estate Forecast Summit consensus forecast, contained the responses of 23 economic and housing market experts. After a lot of surprises in 2020, here’s a look at the forecasts industry experts have for the new year.
Experts predicted 3.5% growth in Gross Domestic Product. In 2022, they predict growth of 3.0%. Compare this to a 2.7% decrease in 2020, and the next couple years may be looking much brighter.
According to the Bureau of Labor Statistics, the unemployment rate was 3.6% in 2019. The pandemic certainly affected this, bringing the unemployment rate to 6.9% in 2020. Industry experts have predicted that it will decrease to 6.2% in 2021 and 5.0% in 2022.
Impacts of the pandemic on the housing market like low rates and a surge in demand brought home prices up by 15.5% in 2020. The NAR Real Estate Forecast Summit forecast showed that experts predicted home prices will increase by 8% in 2021 and by 5.5% in 2022.
2020 saw record low mortgage rates, and while economic and housing experts expect rates to stay relatively low, they do expect an increase from 2020’s rates.
When it comes to the share of people working from home, the NAR forecast predicts that it will decrease from 21% in 2020 to 18% in 2021. The prediction for 2022 is that the percentage of the workforce working from home will be 12%.
Some markets performed better than others during the pandemic, and experts expect them to continue to be strong following the pandemic. Some of the factors that brought about high performance in these markets were a significant increase in new residents, a quickly recovering job market, and compatibility with working from home. These markets included:
• Atlanta-Sandy Springs-Alpharetta, Georgia
• Boise City, Idaho
• Charleston-North Charleston, South Carolina
• Dallas-Fort Worth-Arlington, Texas
• Des Moines-West Des Moines, Iowa
• Indianapolis-Carmel-Anderson, Indiana
• Madison, Wisconsin
• Phoenix-Mesa-Chandler, Arizona
• Provo-Orem, Utah
• Spokane-Spokane Valley, Washington
Experts also noted that unemployment rates lower than the national average in some of these areas suggested that they were particularly advantageous locations for strong employment opportunities. Provo-Orem had the lowest unemployment rate. Madison, Charleston, and Des Moines followed with low unemployment rates. Atlanta and Spokane had the highest percentage of employees working from home.
Low rates, GDP growth, and decreased unemployment predicted for 2021 suggest a better outlook for the coming year. Plus, certain markets have proven themselves strong, even in the face of a pandemic. We’ve seen how unexpected events can completely change the trajectory of the economy, and while these are just forecasts that may not come true, it’s a good idea of what the coming year might look like. If you’re looking to buy a home in the next year, contact us today to receive individualized guidance through the mortgage process.
Source: The National Association of Realtors 2020 Consensus Forecast, NAR, US Bureau of Labor Statistics, US Bureau of Economic Analysis