According to statistical studies performed by Zillow, the average value of a home in the United States rose by 9.9% from February 2020 to February 2021. As we head into the summer of 2021, the average home value in the United States is now pegged at $272,446. This is an eye-opening statistic, considering that the world has spent the last year in the throes of an unprecedented worldwide pandemic that brought with it financial stress, uncertainty, and widespread unemployment.
But as COVID-19 cases start to drop in America, real estate professionals have begun to make forecasts for how the housing market will respond to our new post-COVID normal over the remainder of 2021. While some pessimists believe the real estate market will crash by the end of the year, this article will examine the trends that will drive the housing market over the next few months.
COVID-19’s Positive Effect on Housing
If you’re approaching the housing market with common sense in mind, you’d think that record-setting unemployment and a global pandemic would likely crush the American housing market, right? According to Jeff Tucker, a senior economist with Zillow, the pandemic and rise in unemployment actually created the ideal conditions for home buyers.
Tucker believes here are several reasons for the hot housing market during the pandemic. For one, most middle class and upper middle class received substantial stimulus packages that gave still-employed families a nice chunk of additional income. The banks kept mortgage interest rates near zero during the pandemic as well, giving folks on the market for a mortgage plenty of options for securing a long-term mortgage at a very attractive price.
According to Tucker, ongoing economic stimulus from the government, as well as continued low interest rates on mortgages, all but ensure that the real estate market will remain strong for the rest of 2021.
The Future of The Housing Market
Some economists believe the “work from home” phenomenon that emerged at the beginning of the COVID-19 pandemic could be a new employment normal for many people working white collar jobs.
If working from home is the new normal, more people will want to leave their small apartments and condominiums to find more spacious, comfortable, and private living spaces that they can work from home in. This is another reason why experts believe the housing market will not crash during the remainder of 2021.