Colorado Real Estate News

Top Real Estate Predictions for 2021’s Second Half

Real Estate Trends 2021

Buyers and Sellers ask us what we see ahead for the second half of 2021 in Colorado’s real estate markets. It’s apparent that real estate has been in a hot seller’s market for close to a year, ever since pandemic lockdowns began to lift in mid-2020.

Record-setting low mortgage rates have driven home price appreciation while pent-up home buying demand supported a robust housing market in the first half of 2021. What does the forecast tell us could be in store?


Mortgage Rates Will Likely Increase, a Little

Most experts project a rise in interest rates later this year or early in 2022. The latest Quarterly Forecast from Freddie Mac states: We forecast thatmortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

The anticipated increase is expected to be modest and well below averages for past mortgage rates. With a historical perspective on rates, it will still be a good time for homebuyers who hope to purchase in the next six months. Freddie Mac’s report goes on to say: “While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”


Home Price Appreciation Will Continue, at a Slower Pace

Joe Seydl, Senior Markets Economist at J.P. Morgan, projects home prices to continue to rise. His prediction encourages buyers who are interested in purchasing a home would benefit from jumping in soon. Waiting for rates or home prices to go down may not be wise: “Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six to nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”


Inventory a Challenge, but Optimism Abounds

Home prices are rising, which should moderate as more housing inventory comes to market. George Ratiu, Senior Economist at realtor.com, notes there are signs in the U.S. housing market that we may see the current inventory challenges lessen, creating more choices for buyers. This will contribute to better affordability as buyers avoid bidding wars that often pushed values well above list prices. We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”

Mark Fleming, Chief Economist at First American, commented on the improving economy as a positive for the housing market: “A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.


Real Estate Takeaways

Looking at the forecasts for prices, interest rates, and inventory, experts remain optimistic about the second half of 2021. Contact a Kentwood Real Estate broker with your real estate questions or a Prosperity Home Mortgage consultant with loan or rate questions. Our team professionally serves the northern Front Range of Colorado from Colorado Springs to Fort Collins, Metro Denver, and Boulder.