Zillow’s 2021 housing forecast echoes the projections of other industry experts for an acceleration of home sales and home value appreciation, with numbers anticipated to be even higher than in 2020.
According to Zillow’s Home Value Index, the company expects seasonally adjusted home values to increase by 3.7% from December 2020 to March 2021, and by 10.5% through December 2021. It also predicts home value appreciation to peak in June 2021 at 13.5%.
In fact, the company has already upped its December 2020 forecast: Zillow initially expected a 10.3% increase in home values through November 2021.
Approximately 5.6 million existing homes were sold in 2020, a 5.3% increase from 2019, according to officials. Zillow predicts 6.82 million existing home sales in 2021, the most recorded in a single calendar year since 2005 and a 21.1% increase from 2020.
Quarterly Zillow Home Value Index growth as of December 2020 was 3.2%, the strongest three-month appreciation since 1996.
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“Home values rose sharply near the end of the year at their fastest quarterly rate on record,” said Jeff Tucker, Zillow senior economist. “Sales are taking place at a rapid clip, as momentum gathering in the market since June is still pushing forward at full force and is expected to continue for the foreseeable future.”
Tucker added that record-low mortgage rates are keeping buyers coming to the table – despite rising prices.
“[The low rates] are keeping monthly payments in reach,” he said.
Although mortgage rates are expected to rise in 2021, it’s not out of the realm of possibility that sub-3% rates become the norm following the economic turmoil caused by the COVID0-19 pandemic.
Rates fell to 3.13% in June before bottoming out around 2.67% by the end of the year.
Rounding out the 2020 data, the seasonally adjusted annualized rate of existing home sales in November was 6.69 million – up 25.8% from November 2019. Zillow officials expect this rate to remain high – above 6.65 million – through 2021.
“Our bullish outlook for sales and home values is driven by the current strength of the home-buying market and our expectation that low mortgage rates, demographic tailwinds and an improving economy will continue to prop up market competition,” Tucker said.
