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Real Estate Market Predictions for 2021

Randal Engelmann & Erik Gould

We are Randal Engelmann and Erik Gould, partners in providing exceptional customer service...

We are Randal Engelmann and Erik Gould, partners in providing exceptional customer service...

Jan 12 5 minutes read
Will home prices go up or down this coming year?


Erik:
Where are home prices going in 2021? Stay tuned.

Randal:
Welcome back to Stay Focused, Focus Real Estate's weekly video series. Today, we're going to talk a little bit about the future. What does the future hold? Where are we going from here?

Erik:
Yeah, heading into a new year, and God knows, we'll all be happy to have 2020 behind us.

Randal:
We know that there's a lot of uncertainty out there with the change of administration, with the end of COVID, with unemployment and all of these things happening around us. We certainly want to address the uncertainty, we know it's there, but what we can talk about also, in addition to that, in response to that, is what are the facts? What facts are we seeing in the marketplace today? One of the biggest facts is that our interest rates are at an all time low. We're looking in the twos, people are getting interest rates sometimes in the threes and going, "Aw, I don't want to pay that much."

Erik:
I know, and they're not going up anytime soon.

Randal:
They're not going up anytime soon. We also have 72 million millennials entering the market. They're very well employed, they make very good money, and they're looking for homes. We're certainly seeing that. Through COVID, one of the things that we really dissected was we have all these people moving up. We have all these people that need more spaces. Traditionally, a couple with a kid or two and a dog get a [inaudible 00:01:23] flat in a triple decker with no parking and they're like, "Oh my God, I've got to get out of this space. I need some more space."

Erik:
And people's debt is lower than it's been in decades. People are saving now.

Randal:
Yes, so there's a lot more equity in people's homes. There's a lot of driving forces here. A lot of people are also asking us questions about, "Well, is this a bubble? Is this like 2008?" Well, there's a difference between now and 2008. 42% of the people that own homes in the United States today own them outright, no mortgages. What my people call that is 100% equity, you have a hundred percent equity. One of the things that drove the downturn in '08 was no equity. People were borrowing a hundred percent of the value of the home, okay? Only 7% of the homes in the United States right now have less than 10 equity.

Erik:
10%, right.

Randal:
So those are the buyers that are getting into the market for the first time, right, 5%.

Erik:
A lot of people have a lot of money in their houses, they're secure.

Randal:
Yep, yep.

Erik:
We talk about uncertainty. There's security in the people who own their homes right now and they're able to move up.

Randal:
One of the last facts to chat about is how long people are living in their homes. It used to be six to seven years and people would move on. Now we're talking about an average of-

Erik:
13?

Randal:
... 13 years being. 50% of our inventory disappears because people aren't moving as often as they used to. When you talk about all of these facts and how it affects our housing market, you see how economists can go in and all of these experts say we're going to continue to see a rise in home values over the next 24 months, that's as far as they're projecting at this point, and that the market's still going to be very strong.

Erik:
Couple of the big economists that do real estate research, like the Mortgage Brokers of America, are saying a 3.1% increase nationwide over all markets. As far as we know, hey, real estate is still local, the national economy makes a difference, but every market's a little bit different. So nationally, from a low of somewhere around 3.1%. Zillow is saying-

Randal:
Seven.

Erik:
... 7% increase in 2021.

Randal:
Again, these are national numbers so chatting with your local real estate agent will really make a difference to help you determine what's happening in the future here for what your local marketplace.

Erik:
Hopefully that answers a couple of your questions of the uncertainty you might have about what's happening in real estate, But if you had more questions, drop us a line.

Randal:
Thanks for watching, everybody. Until next time, stay tuned and stay focused.

Erik:
Stay tuned and stay focused. 
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