Expect the post-pandemic economic rebound, improving job conditions and stable interest rates to continue in 2021, according to a survey of more than 20 top U.S. economic and housing experts. Lawrence Yun, the chief economist and senior vice president of research for the National Association of REALTORS®, unveiled the consensus forecast in early December during the association’s second annual Real Estate Forecast Summit.
The group of experts predicted:
- Gross Domestic Product growth of 3.5% in 2021 and 3.0% in 2022;
- An annual unemployment rate of 6.2% next year with a decline to 5.0% in 2022;
- Average annual 30-year fixed mortgage rates of 3.0% and 3.25% for 2021 and 2022, respectively;
- Annual median home prices to increase by 8.0% in 2021 and by 5.5% in 2022;
- Housing starts of 1.50 million next year and 1.59 million in 2022;
- The share of the U.S. workforce working from home to be 18% in 2021 – down from 21% in 2020 – and 12% in 2022; and
- Small declines in office and hotel vacancy rates in 2021, with a slight increase in retail vacancies next year.
When asked if the Federal Open Market Committee will change the federal funds rate in 2021, 90% of the experts surveyed said they expect no change in the current rate of 0%. For 2022, the experts predict a rate increase of 0.25%.
“It is an understatement to say the year 2020 has been filled with challenges and full of surprises,” said Yun. “Yet, one astonishing development has been the hot housing market as consumers eyed record-low mortgage rates and reconsidered what a home should be in a new economy with flexible work-from-home schedules.”
Where the Lehigh Valley Stands
According to Yun, some markets have been performing exceptionally well throughout the pandemic and they’ll likely carry that momentum well into 2021 and beyond.
“[This is] because of strong in-migration of new residents, faster local job market recoveries and environments conducive to work-from-home arrangements and other factors,” Yun said.
The Lehigh Valley is one of those markets performing exceptionally well, particularly because of its proximity to major cities that are experiencing an exodus of individuals looking to leave behind high-occupancy locations and buildings.
According to data derived from the Greater Lehigh Valley Multiple Listing Service, which covers Lehigh, Northampton and Carbon counties, the 2020 market has been hot, tempered only by real estate in Pennsylvania having been completely shut down for three months and by the ongoing lack of inventory.
October data – the most recent data available at the time of this writing – showed that the local housing market continued to be busier than the calendar normally suggests, with new residents looking to move into the Lehigh Valley and with the backlog of buyers and sellers from the shutdown still working their way to the closing table or still trying to find that perfect piece of property.
Multiple offers remain a common occurrence, pushing the median sales price in October to $240,000, and homes are almost literally flying off the market with the average Days on Market in October coming in at just 20 days.
The mix of surging buyer demand and low inventory has put our industry in uncharted territory, and the continued rise in home prices is threatening to ‘chock off’ first-time buyers. That said, mortgage rates remain at record lows and the unemployment rate is slowly rebounding from the early days of COVID-19. We are seeing buyers out in full force, showing amazing spirit and perseverance in working toward their dreams of homeownership.
Real Estate is Safe
Real estate is safe in the age of COVID-19. All area REALTORS® have access to suggested best practices that outline how to keep everyone involved in a real estate transaction safe. Should any consumer – whether they be a home buyer or seller – be interested in learning how they and their REALTOR® can work together to create a safe environment for a real estate transaction, additional information is available at parealtors.org/coronavirus/best-practices.