The 20-plus housing and economic experts participating in NAR’s second annual Real Estate Forecast Summit predicted housing prices to increase 8% next year and 5.5% in 2022. They expect 30-year fixed mortgage rates of 3.0% for 2021 and 3.25% for 2022. Housing starts are expected to reach 1.50 million next year and 2.59 million in 2022.
Home sales will reach 5.52 million in 2020, the highest annual mark since 2006. The median home price this year will set a record high at $293,000.
“It is an understatement to say the year 2020 has been filled with challenges and full of surprises,” said Lawrence Yun, NAR chief economist and senior vice president of research. “Yet, one astonishing development has been the hot housing market as consumers eyed record-low mortgage rates and reconsidered what a home should be in a new economy with flexible work-from-home schedules.”
Unemployment is expected to hit an annual rate of 6.2% next year and drop to 5.0% in 2022. The experts predicted Gross Domestic Product growth of 3.5% in 2021 and 3.0% in 2022. The share of the U.S. workforce working from home is expected to fall from 21% in 2020 to 18% in 2021 and to 12% in 2022. Small declines in hotel and office vacancy rates are expected in 2021, along with a small increase in retail vacancies.
The panel identified 10 real estate markets that have shown particular resilience during the COVID-19 pandemic and are expected to continue their strong performance for the next two years. They are:
- Atlanta-Sandy Springs-Alpharetta, Georgia
- Boise City, Idaho
- Charleston-North Charleston, South Carolina
- Dallas-Fort Worth-Arlington, Texas
- Des Moines-West Des Moines, Iowa
- Indianapolis-Carmel-Anderson, Indiana
- Madison, Wisconsin
- Phoenix-Mesa-Chandler, Arizona
- Provo-Orem, Utah
- Spokane-Spokane Valley, Washington
“As we look towards 2021 and beyond, expect these 10 markets to perform strongly with potential buyers finding conditions particularly favorable to purchase a home,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty. “Overall, residential real estate will continue to be an important driver of our nation’s economic recovery and the activity in these markets will help lead the way.”
NAR arrived at this list by factoring in economic indicators deemed influential to a metro area’s recovery and growth prospects in a post-pandemic environment over the next two years. Those include: net domestic migration, including people relocating from expensive areas on the West Coast; the leisure and hospitality industries; unemployment rate; the percentage of the local workforce working from home; and the share of workers in the retail sector.
Several of the markets on the list are attractive to workers in West Coast cities who are looking to buy a home, particularly technology workers from organizations with flexible or permanent work-from-home policies. The Phoenix metro area had the largest influx of people migrating from West Coast metro areas, followed by Dallas. NAR identified Atlanta as the city with the highest share of workers working from home at 8.8%, followed by Spokane at 7.2% The national share of workers working from home is 5.6%.