Now that we’ve turned the calendar year to 2021, it’s the ideal time to look at what the coming year will bring in the real estate market. Though 2020 was unwelcome by most measures, one of the few winners of last year was the housing market.
That held true here in Boulder County. Despite a slow down early in the year, 2020 housing emerged as a winner. Home sales and prices continued their upward trend, following a brief lull as the realities of the pandemic hit at the beginning of the traditional selling season of spring and summer.
Another notable benchmark of 2020: home price appreciation rate was high and so was the historic sales volume. In a 2020 benchmark, over $33.1 billion of residential real estate sold was sold in the Denver metro area, according to the January 2021 Denver Metro Area (DMAR) Real Estate Market Trends Report.
During the same period, inventory was among the lowest ever. Single-family detached properties in the Denver metro area ended the year with 39 percent less inventory than December 2019 with only 1,316 houses on the market. Attached properties on the market also decreased with 27 percent fewer than the previous year, or 1,255 properties.
“On first glance the current Denver metro real estate data can feel staggering for potential buyers,” said Lawrence Yun, Chief Economic and Senior Vice President of Research at the National Association of Realtors®. “However, the current ultra-low mortgage rates are helping buyers to accomplish their American Dream, which means the Denver area is actually still more affordable now than a year earlier even though home prices rose 14 percent. The 30-year fixed rate, which has dropped more than one percentage point over the past 12 months, is hovering into record lows. These low mortgage rates decrease borrowing costs significantly.”
Nationally, real estate is on a winning streak, according to Realtor.com. Below is the national outlook on trends that will shape 2021.
By the end of 2020, the national housing market finished strong. New highs for home sales due to a strong, though delayed, buying season were reported. Now as we enter 2021, sales activity is expected to slow. Early in the year, buyers may feel numb to the challenges of the pandemic and have grown less inspired by the exceptionally low mortgage rates of less the 3 percent. But mortgage rates are expected to rise in the second half of 2021, which may push buyers toward the need to purchase sooner rather than later.
The net outcome that home sales will increase 7% in 2021 along with the expectation that the season will be more normal, will be made possible if the vaccine roll out continues.
For 2020, home prices in 2020 are expected to end 7.6% above 2019. Nationwide price gains are expected to ease slightly in 2021 to a 5.7% increase, reports Realtor.com.
Inventory will continue to be a challenge across the nation, thanks to strong buyer demand. But there is an expected increase in new homes for sale as well as sales of existing homes as the Boomer generation move.
Read the full report at realtor.com/research/2021-national-housing-forecast and more about the Denver Metro Area statistics at dmarealtors.com/dmar-real-estate-market-trends-report-jan-21.
By Tom Kalinski. Tom is the broker/owner of RE/MAX of Boulder, the local residential real estate company he established in 1977. He was inducted into Boulder County’s Business Hall of Fame in 2016 and has a 40-year background in commercial and residential real estate. For questions, e-mail Tom at [email protected], call 303.441.5620 or visit boulderco.com.