As 2020 comes to an end and COVID-19 continues to hit all parts of the economy, analysts in NAR (National Association of Realtors) and the Fed (The Federal Reserve) have been watching carefully as the housing market continues to exceed current expectations.
However, the current upward trend is unlikely to continue indefinitely. As we turn towards 2021 and the inauguration, we get the once every (4 or 8) years moment of breath-holding. The real estate market forecasters are predicting a slow home sales growth going into 2021. Of course, there are many factors that play into the model and the real estate market will have some fluctuations from any prediction. However, this data should be taken into consideration when making future home-selling or home-buying plans. Take note of what homeowners need to know about selling an Alexandria VA home in 2021.
Mortgage Rates Rising Across Virginia
Economists are predicting a rise in mortgage rates in 2021. The Fed is the largest buyer of mortgages in the United States and will continue to keep short rates low. However, this will not hold true for longer term treasury bonds or mortgages. Even though the Fed is not directly in control of how rates move, their policies affect rates. The Fed’s decreasing purchase of mortgages will continue to slow throughout the new year and into 2022. The Fed is somewhat reliant on the new vaccine rollout and normalization of the economy. As normalization resumes, the Fed will likely change their policy, which will increase rates over time.
Increased Volume Will Cause a Buyers Market In Alexandria VA
As the economy has been held back the past year, many families that normally would have purchased a larger home or relocated to a more desirable area waited due to money constraints — families have been hesitant to make moves during the pandemic. As demand remained static, inventory decreased substantially causing price inflation in the real estate market. However, the forecasters indicate that the price inflation will be slowing as we enter 2021.
By the end of the 1st quarter in 2021 we will likely see price deflation. This is due to the expected increase in the amount of homes on the market in the new year, which creates more competition for home sellers when selling their Alexandria VA homes in 2021. The cause for the increase in listings? The mortgage forbearance act guidelines will begin to end in 2021. This means the hundreds of thousands of homeowners who were in forbearance will be forced to sell quickly unless they can begin to make on-time payments. Most homeowners cannot afford the luxury of waiting months for their home to sell on the market after accounting for holding costs such as insurance, maintenance, taxes, utilities, and unexpected life events.
Alexandria Virginia Home Sale Prices Will Drop
The expected increase in mortgage delinquencies will contribute to the downward trend of home prices in 2021. Homeowners should know about this before selling their Alexandria Virginia homes in the new year. The current COVID-19 pandemic is affecting unemployment rates, which will eventually impact housing prices negatively. However, many home sellers will be inclined to hold onto the current inflated prices, which will cause houses to sit for longer as they will be priced above market value. When homeowners consider how long it will take to sell their Alexandria VA house, it is important to consider property taxes and the original investment cost (along with any ongoing monthly expenses).
Timing Your Alexandria VA Home Sale
If you’ve been considering selling your house in Alexandria VA in 2021, now could be the time to put your home on the market in order to capitalize on the inflated prices before they fade away. Selling now would allow for little to no equity loss compared to holding the property for another year or two. As property values drop and mortgage rates continue to rise, there may be a decrease in property value and a loss of equity by holding onto the property. When mortgage rates increase, buyers will make lower offers because it’s what they can afford. Some homeowners will go underwater on their property having more to pay the bank than they would get from selling their home.
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Surprisingly, this is the first I have heard of these tips, even after being in the real estate market for ten years now. But they are accommodating and are also very practical.