Like the rest of the country, Triangle-area homeowners and potential buyers found themselves in the midst of an uncertain 2020 thanks to Covid-19. A small dip in home sales came alongside the first few weeks of the pandemic, but it quickly rebounded as mortgage rates dropped to a historic 50-year low several times throughout the year. With rates steadily remaining under 3 percent, sales shot up, as did housing costs.
While the early days of 2021 has essentially remained a continuation of the 2020 market so far, it’s inevitable that mortgage rates will start to climb as the market rebounds. What does that mean for the Triangle market and how the community should adapt?
Here are quick predictions about how mortgage rates will affect the Raleigh area for the upcoming year.
First of all, it’s important to note the Triangle MLS reported a 9 percent increase in housing sales from 2019 to 2020. The Mortgage Bankers Association predicts home purchases will remain steady—and even increase slightly over 2020—through 2021 and even into 2022. That means as the trend of low mortgage rates continues, it remains a great time to buy. There’s only one problem: low inventory across the Raleigh, Durham, and Chapel Hill area may make it difficult for buyers to find the right home.
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That lack of inventory means a couple of different things, depending upon whether you’re buying or selling. With sales numbers predicted to increase but a lack of product, costs for the purchase of a new home may continue to rise. That means it will remain a seller’s market for the year. If you’ve considered selling, it may be the perfect time to make your move. But if you’re buying, it may mean you’ll pay more if you get into a bidding war.
If you’re buying and you haven’t jumped on these low rates, don’t panic, though. There’s still time to plan ahead. New home construction may be a good option for you. It not only allows you to avoid the stress of multiple offer situations, but it may keep you within a planned budget. Just keep in mind that new construction takes time and can get off schedule, especially with the shortage of lumber and homebuilding supplies caused by Covid-19 and wildfires in California.
The important thing to understand is that as global recovery continues to happen, mortgage rates will remain low for the predictable future. Keep in mind that while rates are bound to increase, it won’t create massive price hikes that should concern you. In other words, if you’ve been thinking about buying a home but decide to wait a few months to see if more inventory is available, it won’t make a considerable difference on your bottom line. For example, while a 3 percent rate might save you a bit of money versus a 3.25 percent rate, saving for a larger down payment or working to improve your credit score will likely make the bigger difference in the long run.
In the end, what will be most important to finding your dream home will be making sure you have the cash savings and top credit score to make the most of those great mortgage rates.
Thinking about buying a home? Check out this list of local professionals with the Jim Allen Group.
The Jim Allen Group is a nationally-recognized and award-winning real estate team in Raleigh, North Carolina ranked the #1 Coldwell Banker HPW Sales Team in the nation.