There’s no doubt that this past year has been a challenging one. We experienced a global health crisis, economic downturn, social unrest, and natural disasters, just to name a few. As a result of state-imposed gathering and worker restrictions, and extreme concerns for the continued spread of the virus; many homeowners have reevaluated their living space and what would be best for their family entering 2021. Fortunately, experts are forecasting that the upcoming year is one in which you can be optimistic about selling your house for the following three key reasons.
1. The Economy Is Expected to Continue Improving
The U.S. economy is steadily improving after the economic downturn due to the COVID-19 health pandemic. This outlook is supported by expert reviews of key economic factors, including the gross domestic product (GDP), unemployment, job outlook and inflation. The most critical economic indicator is the GDP, which is a monetary measure of the market value of all goods and services produced in a certain period. The most recent GDP rate was approximately +33.4% for the third quarter of 2020, a large jump from the second quarter rate of -31.4%.
When it comes to unemployment, the Federal Open Market Committee (FOMC) estimates the unemployment rate will remain at 6.7% for the remainder of 2020, and it will gradually decline to 5% in 2021. The job outlook, according to the Bureau of Labor Statistics (BLS) expects total employment to increase by 6 million jobs now through 2029. By 2029, positions in health care and social assistance are projected to grow by 3.1 million. Similarly, computer, math, energy production, e-commerce, transportation, and warehouse occupations are predicted to grow rapidly as well. When it comes to inflation, the core inflation rate is predicted to be 1.4% in 2020, and between 2021-2023 the rate will gradually increase to 2%, which is the target inflation rate in a steadfast economy.
2. Interest Rates Are Projected to Stay Low
In March 2020, the FOMC held an emergency meeting to discuss the economic impact of the global health crisis, which lowered the federal funds rate to between 0-0.25%. The federal funds rate is what controls short-term interest rates. These include banks’ prime rate, the LIBOR (London Interbank Offer Rate, which is the global reference rate for unsecured short-term borrowing in the interbank market), adjustable-rate loans, and credit card rates. The Fed is also working on keeping long-term rates low to make borrowing money cheaper, and as a result, encourage consumer and business spending.
In the latest predictions from Freddie Mac, interest rates for a 30-year fixed-rate mortgage are expected to remain where they currently are, at or near 3% for the next year. These low rates will continue to drive demand for those looking to sell your house in the years to come.
3. Future Home Sales Are Forecasted to Grow
As the economy continues to improve, and interest rates remain low, homes are expected to continue appreciating as more people will buy in the coming year, as indicated in the two (2) previous factors. Danielle Hale, Chief Economist at realtor.com says: “We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year.”
Economic experts are in align with Danielle Hale, forecasting that both buyers and sellers will remain active in 2021. If you have thought about buying or selling your house this year but have held off, now is the time to take advantage of the market as it will continue to thrive!