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January Journal 2021


What to Expect from 2021 in Housing

The real estate industry evolves every year, with new regulations, laws, technology, and trends affecting borrowers and homeowners. Economist Danielle Hale expects home sales to surge another 7% and home prices to rise another 5.7% above 2020 levels.

Demographics and housing supply are key pieces to continued growth. Younger Millennial and Gen-Z buyers likely will play a growing role in the housing market. Prices, and higher rates, will create barriers to entry for the many first-time buyers in these generations who haven't yet built home equity. While builders are expected to increase production for single-family homes by another 9% in 2021, the market will remain seller-friendly. Buyers will still enjoy relatively low rates and an eventually improving selection of homes for sale.


Should I Refinance?

Mortgage refinancing isn't all about rates. Before starting the refinance process, there are a few things to consider. It may not be a good idea if you plan to move in the next two years, for example, because it gives you little time to recoup the closing costs. Rates and credit score both affect your mortgage rate. If you expect your credit score to improve, you can increase your loan options by waiting to apply until your score rises.1


Job Growth Slows

At the end of 2020, job growth decelerated for the fifth month in a row, posting the lowest growth rate since February, according to the Bureau of Labor and Statistics.

Payroll employment grew by just 245,000 in November. The transportation and warehousing subsectors are responsible for more than half of this growth; residential and construction employment accounted for 15,400 of those jobs. In December, the U.S. unemployment rate fell two-tenths to 6.7%.2

Market Recap 2020

5.66 million - Projected annual home sales 3

+10.3% - Year-over-year home value growth 3

$375,000 - Average purchase loan amount 4

5.49% - Percentage of mortgages on suspended payments 5

*Data as of December 2020


38% of renters can afford to buy a home.6


Considering Borrowing Against Home Equity?

Home values are up. In keeping with the rise in the median cost of a home, the average purchase loan amount recently hit $375,000, the highest-ever since the inception of the Mortgage Bankers Association's survey in 1990. If you are looking at accessing cash in your home, consider these unique facets of a home equity loan or a home equity line of credit (HELOC) before applying:

Determine if you have sufficient equity - at least 15% to 20%. Lenders will use equity to define how much you can borrow.

Consider taking action to improve a credit score below the mid-600s. A higher score is more favorable when the lender sets your rate/s. Having a reliable payment history will improve your approval odds as well.

Look at your debt-to-income ratio. Often lenders look at borrowers as lower risk when their debt relative to their income is 43% or lower. Lenders will scrutinize your income as well to make sure you'll be able to repay the loan.

Home equity loans and HELOCs usually have lower interest rates than credit cards or personal loans. They can help when you need a large amount of money to pay for home improvements, debt consolidation, or any other large expenses.7


Multi-Generational Homes Grew in Popularity

Last year, the pandemic fueled demand for new home features such as accommodations for older family members. For transactions completed after March, homebuyers were much more likely to purchase a multi-generational home. These homes accounted for 15% of all sales. Economic hardship, the desire to pool resources to afford more space, and the ability to see and care for family all helped to fuel this trend.8


1; 2; 3 HousingWire; 4 cnbc; 5 HousingWire; 6; 7 bankrate; 8

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