The Outlook for Mortgages and Real Estate in 2021

2020 was a tumultuous year on all fronts, and most investors and homeowners are hoping for more stability and calm in 2021. Looking forward to the rest of the year, there’s some speculation about the future of the real estate market and the role that residential mortgages will play in our financial futures and investment plans. So what is the outlook for mortgages and real estate in 2021? Well, the answer is complex and multifaceted, with a mixed bag of news for both lenders and home buyers or investors.

The demand for residential real estate, and thus residential mortgages, is undoubtedly heating up. Despite all the economic woes that came our way in 2020, it was a surprisingly good year in real estate, particularly in key markets. While this sounds good on paper, it leads to some complications for potential buyers or investors. Specifically, inventories of available homes are at six months if not one-year lows both nationwide and in key markets. It’s a supply and demand issue: supply simply hasn’t grown to keep pace with demand and that’s putting pressure on inventories of available homes.

This is in part a generational issue: 4.8 million Americans turn 30 this year, and that number will remain the same for the next several years to come. As Millenials move fully into adulthood, many of them are pursuing homeownership for the first time. While this is probably a smart move for the individual, the collective action puts additional pressure on an already stressed housing market. Prices will reflect this, as will the availability of mortgage loans.

Dovetailing with this issue is the question of mobility and relocation. 2020 has shown that many jobs can be done remotely, and younger workers are taking advantage of this in full by pursuing residence away from traditional business centers. However, they still want the convenience, cultural amenities, and lifestyle that urban living affords. So while traditional business centers like New York and the Bay Area are seeing record numbers of people leaving, some smaller cities are welcoming a huge influx of new arrivals. The Atlantic South and the urban Southwest are the biggest recipients of this new migration, and housing availability and prices in those regions reflect this shift.

So now we turn to find the best course of action for home buyers or savvy investors. That is a difficult question to answer, as it depends on a number of things. What region of the country do you reside in? Where would you like to retire? What is your current financial situation and what are your long-term goals? Where are your other investments and what are you doing to manage them in tandem with your real estate ambitions? These are complex issues, and finding the right advice and guidance to illuminate the blind spots on your journey is a must.

This is where an experienced financial advisor comes in. Someone with the wisdom and know-how to make the most of the current market and find the opportunities you need in order to build your financial success. Engaging the right professional advice will be key in navigating the real estate and investment markets through the tricky months ahead as we move through 2021 and into 2022.

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