Jennifer Mack column: The state of the U.S. housing market heading into 2021
U.S. home sales continue to stun even as Covid-19 surges across the country. Few experts could have predicted the market would be this strong after so many months of uncertainty for so many Americans.
“The housing market’s historic rebound since bottoming in the spring has been nothing short of amazing,” First American Chief Economist Mark Fleming said in a recent blog post. “After falling to a near-decade low in May, existing-home sales hit a 14-year high in September.”
Many mortgage lenders have loosened restrictions on credit, which has allowed more people to qualify for mortgages. This along with increased house buying power due to rising incomes and falling interest rates, combined with equity growth and household formation, are all factors that contribute to the strength of the housing market.
Tenure length, which is the average amount of time homeowners stay in their home, continues to rise and this is what is leading to the tight supply and is one of the few negative factors for sales growth. The pandemic is surely contributing to this increased tenure length as more older Americans are opting to stay put and postponing plans to move to retirement destinations or active adult communities.
Heading into 2021, my team is keeping a close eye on the strength of the labor market, as this impacts the mortgage industry's willingness to lend. With more millennials forming households and mortgage rates expected to remain low, the prospect of a continuing strong housing market is likely. The unpredictability of the virus however and whether it results in more lockdowns and job instability is something experts will be keeping a close eye on in the new year.
Jennifer Mack has more than 15 years of experience in the real estate industry. Her team services Virginia, Maryland, and D.C., with the bulk of her business in the Woodson High School area. You can contact her with real estate questions at email@example.com or by calling 703-672-0038. She’s happy to answer specific questions privately or more general questions publicly in this column.