2020, the year of pandemic has been a challenging one for all. Like all the other markets, the real estate market also saw a lot of ups and downs during this time. And while we’re on the topic, you shall also know that the pandemic year 2020 affected the real estate trends in the year 2021. Various reports submitted by the real estate experts showed the soaring values of homes and a high jump in the demands of buyers, meanwhile the rates of mortgage values saw a decline. The steady increase in the house sales towards the end of the year 2020 made up for the osses that the market faced at the beginning of the pandemic.
In today’s housing market, here are some trends that you must be aware of:
During the initial phase of 2021, the home prices saw a growth of nearly 20%, as compared to last year. While it certainly is very appealing for the sellers as a rise in prices mean extra money, the buyers can also find a very good home in their budget, the condition being that you are willing to give up some “nice-to-haves” for your “must haves”. The buyers can look for the least expensive homes in their neighbourhood, which is also in their budget and upgrade it over time. This will save both your time and money. High Demand and Low Supply mainly causes the inflation in the housing prices.
The average mortgage rate interest of the 15 year fixed mortgage, as per the data released in January 2021showed a decrease by 2.2%. The economists also observed that the rate will continue to revolve around 3% in 2021. A lower mortgage interest rate would mean more affordability for the buyers, and they’ll be motivated to buy the property sooner rather than later.
A low interest rate on an unaffordable house is still a bad deal. So it is suggested that you stick to your budget and choose wisely. Stick to monthly payment limit and save for down payment amount and mortgage.
Getting things done from the comfort of your homes using internet services has gained popularity amidst the pandemic, and even before that. Just like that, there are so many real estate services like zillow.com, realtor.com, trulia.com, redfin.com, etc. that allow you to browse or list homes for sale from your living room. Similarly, these services now offer to buy or sell your house for you as well. That means you can get all your work done and delivered at your doorstep.
Rent-to-own: Some sellers and traders offer a rent-to-own agreement to those who can’t afford the property yet. This deal offers you to pay a certain amount of rent before you actually buy the property and make it your own. Also, this agreement allows you to earn some time to save for down payment and extra expenses. You also get more time to get pre-qualified for mortgage.
The risk factor involved here is that the rent will add up to the money that you are saving for ownership in the future and later if you decide to not buy the house, all the extra money paid goes waste. You have to also take care of the maintenance and repairs after the rent. it ultimately leaves you in a very bad financial place, but if you think the house is worth the risk, it will be all WORTH IT!
Loan for down payments: Never, I repeat, NEVER, take a personal loan to pay for your down payments. It’s never a good option to go for purchasing property without having some money aside for down payment. You should have at least 10-20% money saved for down payment. Buying a property without this will ultimately result in your own financial loss. Moreover, most mortgage lenders won’t even allow you to buy the property without this much money already kept aside.
We hope that this article has helped you plan your payments and investments for the future.