2021 Predictions That Will Make You Look Forward Positively
Fannie Mae has already shared their predictions for the 2021 Housing Market but they are now changing it. What could have caused the sudden change?
There are three major contributing factors to Fannie Mae’s prediction;
- Positive progression of vaccine developments
- Updated expectation of the additional stimulus
- Stronger-than-expected incoming data
So, what has changed?
Full-year growth or Gross Domestic Product (GDP)
- Full-year growth for 2020 is now expected to be negative 2.2%. Previously, it was forecasted at negative 2.5% so there has been a .3% increase.
- Full-year growth for 2021 is now expected to grow by 4.5%. Previously, it was forecasted at 3.3%, a healthy 1.2% increase.
Fannie Mae has gone as far as 2020 with their predictions. They previously predicted it at 3% growth, but now their predictions have ticked up to a 2.% increase.
Housing Market
October was stronger than predicted. However, things are slowing down recently. Q4 is to hit 7.6 million despite the slight downward movement. Previously, Fannie Mae’s prediction was 7.16 million.
Mortgage Originations
Because of the increasing pace of existing sales and unexpected refinancing activities, predictions for mortgage origination also changed.
- 2020 increased from $169 billion to $4.29 trillion
- 2021 sees a change from $745 billion to $3.47 trillion
- 2022 will hit $2.84 trillion
Housing Inventory
Inventory in the housing market continues to be an issue. However, 2021 Q1 is stronger than Q1 of 2020. The rapid appreciation has made homes less affordable. In fact, the CoreLogic National Home Price Index reports home prices have jumped 7.3% between October 2019 and October 2020.
Low inventories of existing homes for sale and increased buyer demand pushed the demand for new builds to continue to climb. Single-family new construction rose 6.4% in October, the highest rate since 2007. However, Fannie Mae reports this pace is unsustainable and should taper off by spring.
Migration Trend
People continue moving to more spacious areas, specifically suburban locations. Fannie Mae’s data shows a continued upward rate for urban dwellers purchasing homes in lower-density areas in November. Whether such a move is a permanent shift in homebuyer’s preference or temporary due to the pandemic, it remains to be seen. Regardless, Fannie Mae thinks the trend will not be slowing down anytime in the near future.
In conclusion, the housing market is doing pretty well amidst the pandemic and its repercussion. With the recovery in general on the horizon, the housing market will continue to do well. Credits to agencies like Analytics Before Foreclosure for continuously helping distressed families keep their homes during the pandemic, and even beyond.
