Record purchases possible this spring home-buying season

The real estate market continues its upward movement defined by low-interest rates, rising home appreciation, and increasing housing demand.

Looking forward toward this year’s home-buying season, forecasters are discussing a record-breaking performance from the real estate market.

From a homebuyer or homeowner perspective, the high-performing market means a number of things. Here are some big takeaways about where the market is headed and the positive forces that drive it.

The demand for homes will only increase as the labor market improves. As the market goes through this enhancement, demand for homes may continue to leave an impression. As a result, current homeowners will enjoy increased home equity and greater financial flexibility if they decide to refinance their mortgage.

The growing demand for homes is also associated with low-interest rates. Although they have increased slightly since the beginning of the year, they remain extremely low, keeping home ownership affordable.

The third positive factor is the unemployment rate. As it improves, more families will have the resources and confidence to enter this active real estate market.

New consumer spending and confidence are sure to further boost the real estate market.

Beyond the economic factors, progress on vaccine distribution is another positive indicator. With more than 15% of the American population already vaccinated, the improving health picture bodes well for overall economic progress.

As noted earlier, interest rates inched upward, but that’s because the economy is improving. Potential homebuyers shouldn’t be alarmed, however. Forecasters do not project the rate increasing as fast as it fell. Both aspiring homebuyers and current homeowners can continue to take advantage of the low rates for purchase or refinance.

The largest cohort of buyers, millennials, are reaching the age where homeownership is more likely. Now that most millennials are around 32 and 33, there’s an expectation of a wave of new homebuyers to support the market in the years to come.

Good thing that newly built inventory is also on the rise. Home construction activity is picking up but some challenges remain. Supply chain and material costs increased last year and remain relatively high. There are hopes as more people get back to work and the economy further recovers, some of these costs will flatten and retreat from the unexpected price surge from 2020.

When you mix all these factors together, it’s not surprising that home demand will continue to be the story in 2021 with home purchases and bigger home appreciation leading the way.

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