What does the 2021 housing market look like, and how will it impact relocation? The 2020 housing market rose at a blistering rate, far outpacing initial forecasts. The rapid 2020 pace is attributable to several factors. These factors include historically low mortgage rates, work from anywhere policies, and demand for housing with more space away from crowded cities.
2020 Housing Market Performance
- Home sales: 5.52 million, highest annual mark since 2006
- Median home price: $293,000, record high
Source: National Association of Realtors®
Can the 2020 housing market produce a repeat in 2021? Several signs seem to suggest yes, a repeat is possible. The National Association of Realtors® (NAR) predicts the 2021 housing market is shaping up for a post-pandemic rebound. Relocation Management Companies (RMCs) strongly recommend that companies encourage transferees to buy a home instead of renting. Companies can also save money on relocation through a Buyer Value Option Program over direct reimbursements. Companies should be aware of how the 2021 housing market may impact their relocation program.
What Does the 2021 Housing Market Forecast Look Like?
Lawrence Yun, NAR Chief Economist and Vice President of Research, presented a consensus forecast of over 20 top U.S. economic and housing experts. The forecast covers several important points, including economic growth, unemployment rates, and mortgage rates.
Specific points in the 2021 forecast that will impact relocation include:
- Average annual 30-year fixed mortgage rate: 3.0%
- Annual median home price rise: 8%
- Housing starts: 1.5 million
- Federal funds rate: expect no change from current 0%
What Do the Forecast Numbers Mean?
Looking at the 2021 housing market forecast, it appears that low-interest rates will continue to fuel demand for houses. Builders have picked up the pace and new home construction is rising. Monthly new residential construction for December 2020 shows an annual rate of 1,417,000 completions. This rate is 15.9% above the revised November estimate, and 8% above the December 2019 rate of 1,312,000. However, builders are finding it difficult to hire workers due to a labor shortage in the construction industry. Therefore, increasing the supply of housing will not bring immediate relief to home buyers.
The annual median home price rise of 8% will have a direct impact on anyone buying a home. This includes transferees in a relocation process. Prior to the pandemic average annual home prices grew at a 3.9% rate, falling to 3.8% in 2019. For 2020, home prices rose 14.2%, far above the previous average. A forecast of 8% increase in annual median home prices indicates the 2021 housing marketing will be a robust seller’s market. Affordability will impact many markets, making it difficult for homebuyers to find and purchase homes.
What Should Companies do About the 2021 Housing Market?
Companies should work with RMCs that use top real estate agents to navigate the home buying and selling process. RMCs can also help companies understand how to gain all the benefits of a Buyer Value Option Program. Many home buyers and sellers have been successful during the COVID-19 pandemic by leveraging virtual agent services. In fact, the entire real estate experience can be successfully conducted virtually. These virtual services are often preferred by home buyers and sellers. They also help speed the home buying and selling process.
By leveraging technology to enhance the home buying and selling process, top real estate agents help ensure transferees are able to buy homes in their new location. Also, RMCs can show companies how to save costs and reduce risks with a Buyer Value Option Program. As a result, relocations will be successful, and transferees will have a satisfactory experience.
GMS’ team of domestic relocation experts has helped thousands of our clients understand how to navigate the housing market to ensure transferee’s successful relocation. Our team can help your company understand how the 2021 housing market will impact your relocation program.
GMS was the first relocation company to register as a “.com.” The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS sets the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.
Contact our experts now to learn how the 2021 housing market will impact your company’s relocation program, or call us at 800.617.1904 or 480.922.0700 today.
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