As 2020 progressed, the pandemic took a toll on all sectors of the economy. Analysts have been paying careful attention, and their conclusions are not all optimistic. While the housing market did extremely well overall, the trend is not likely to hold. All eyes are now turned toward what lies ahead in 2021. The real estate market forecast indicates slow home price growth.
There are several factors at play that will influence the market. While some of these may fluctuate slightly from the predictions, the data merits strong consideration in making your plans for the future. You should definitely take note of what homeowners need to know about selling their Louisville homes in 2021.
In 2020, families who would normally make a move upward in home size and amenities held off because of economic factors. Additionally, many entered a holding pattern, hesitant to make a move during the global pandemic. Inventory is currently extremely low, causing homes to be in demand. However, the predictions indicate that this trend will be reversing in the upcoming months.
Therefore, a soaring number of listings will soon be on the market. Homeowners selling their Louisville homes in 2021 are in direct competition with these numbers. As it is unlikely that a high number of those who fall under the mortgage forbearance act guidelines will be able to begin making timely payments, the market is expected to be flooded. Very few can afford the luxury of time to hold onto a listing for an indefinite period. Additionally, should a relocation or other life-changing event be forcing a move prior to the sale, the financial means are simply not within the budget for many.
Prices May Drop
In addition to the increase of supply causing housing prices to level off at best, the expected growth in delinquencies (when a borrower misses a payment on a loan) may mean downward pressure on home prices for the first time in almost a decade in 2021. The current uptick in COVID-19 cases may affect employment rates, which could also have an impact on housing prices.
Many sellers may be inclined to hold on to pre-COVID pricing, causing their homes to sit for longer periods on the market. This also leads to an overall lower sales price. When you set the true value of the property, you must take into account the annual taxes, the original investment, and the monthly expenses and maintenance, along with the expenses involved in listing and selling a home. If a move is in your future, it may be wise not to delay.
Mortgage Rates May Rise
Homeowners selling their Louisville homes in 2021 also need to know that economists are predicting a rise in mortgage rates. The Fed, or the Federal Reserve, is the largest single buyer of mortgage-backed securities. The Fed will likely keep short rates lower; however, they may not for some longer-term treasuries or mortgages. While they are not directly involved in setting the current mortgage rates, their policies indirectly affect these rates. Their purchases of mortgages have slowed as the year has progressed. The amount they purchase as the new year begins will depend upon the COVID vaccine and its effectiveness in normalizing the economy. In addition to the fed, new banking capital requirements coming into effect in 2021 will also likely cause rates to rise.
There is no time like the present. As delinquencies rise, homeowners need to know that the value of their property will change very little toward the positive over the coming year. Selling now will mean little to no equity loss, as compared to holding the property for another year. Should the prediction of dropping property values and rising mortgage rates come to fruition, you could actually see a loss of equity by holding onto your property past the end of the year. Additionally, with mortgage rates expected to climb, buyers will likely make lower offers as the year progresses. Some homeowners may become financially upside down in their property. This means they have more money invested than they will ever see come back through a sale without the real estate peak market.
Planning on selling your Louisville home in 2021? Get ahead of the curve by selling now to We Buy Houses in Kentucky! Homeowners need to know prices will likely drop and the market will likely be flooded with distressed properties. With extremely quick closing timelines, we make the process easy and much less stressful overall. We welcome you to call We Buy Houses in Kentucky today at 502-383-1484 to save yourself frustration, time and most importantly money. Learn more about what we can offer by reaching out to our husband and wife team, Daniel and Catherine Close, today at 502-383-1484!
We Buy Houses in Louisville, Kentucky and surrounding areas, including: Bardstown, Fern Creek, Highview, Jeffersontown, La Grange, Lyndon, Mount Washington, Newburg, Okolona, Shelbyville, Shepherdsville, Shively, St. Matthews, Taylorsville and Valley Station. We also buy homes in Southern Indiana, including these areas: Clarksville, Jeffersonville and New Albany. Call us to see how we can help you today!