The National Association of Realtors recently announced their forecast for 2021: 6% growth in home price, but sources familiar with the matter now say that some NAR employees feel the forecast should be significantly higher.
Contributor, Forbes.
November 16, 2023 1:45 pm
Some of the most influential forecasts in real estate are those released by the National Association of Realtors. Consumers, agents and brokers nationwide rely on these statements when advising their clients and making their financial planning. But sources familiar with the matter say that this year’s release of the influential 2021 forecast shared in Chicago was influenced by more than just financial models and forecasting tools.
The forecast showed an expected increase in existing-home sale prices of about 6%, but it now appears like this outlook could have been as high as 7%, which would accelerate average existing-home prices faster than most people’s income creating a sense of urgency for first-time home-buyers that we haven’t seen for years.
This sense of urgency for first-time homebuyers is further accelerated by the fact that most economists are expecting mortgage rates to increase in the years to come. The chief economist at Wells Fargo, for example, is expecting that a 30-year fixed rate mortgage will be rise to about 4.5% in 2021.
A first-time home buyer, who is in 35% of all US residential real estate transactions, will not only have to pay a higher price for a home if they were to postpone a purchase if they wait beyond 2021, but also will likely see a further increase in their monthly payment due to expected increase in the mortgage rate. Compared to a forecasted increase in the household income of about 3%, it would likely be a costly mistake for a first-time homebuyer to wait to see what happens like it has become popular for the young professionals.
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