Home Prices: What Happened in 2020? What Will Happen This Year?

The real estate market was on fire during the second half of 2020. Buyer demand was way up, and the supply of homes available for sale hit record lows. As you may know, the price of anything is determined by supply and demand, due to short supply and high demand, home prices skyrocketed last year! See the below comment from Dr. Lynn Fisher, Deputy Director of the Federal Housing Finance Agency (FHFA) Division of Research and Statistics I thought you might find interesting:

“House prices nationwide recorded the largest annual and quarterly increase in the history of the FHFA Home Price Index. Low mortgage rates, pent up demand from homebuyers, and a limited housing supply propelled every region of the country to experience faster growth in 2020 compared to a year ago despite the pandemic.”

That being noted - Here are the year-end home price appreciation numbers from the FHFA and two other prominent pricing indexes:

• Federal Housing Finance Agency 10.8%
• CoreLogic 9.2%
• S&P Case-Shiller 10.4%

I think we would all agree that the past year was truly a remarkable time for homeowners as prices appreciated substantially. In my humble opinion, nobody states it better than Lawrence Yun, the Senior Economist at the National Association of Realtors (NAR):

“A typical homeowner in 2020, just by being a homeowner, would have accumulated around $24,000 in housing wealth.”

What will happen with homes this year?

I strongly believe, like so many experts believe buyer demand will soften somewhat as mortgage rates are poised to bump up slightly. Some also believe the inventory challenge will ease as more listings come to market this year.  Based on this, most forecasters anticipate we’ll see strong appreciation in 2021 – but not as strong as last year. Here are seven prominent groups and their projections:

My/The Bottom Line

Home price appreciation will be strong this year, but it won’t reach the historic levels of 2020. If you’d like to find out what your current home value is, feel free to call, email or text for a contactless social distancing Price opinion of your home...