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What Will Happen With Home Values in 2021?

Kelly Allen

After attending Georgia College and State University, Kelly Allen decided it was time to pursue a new challenge: the wild world of residential Real Es...

After attending Georgia College and State University, Kelly Allen decided it was time to pursue a new challenge: the wild world of residential Real Es...

Dec 7 3 minutes read

Here’s what we think will happen with real estate values in 2021.

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What will happen with real estate values in 2021? To answer that question, there are a couple of factors to examine. 

The first is what might happen with all the forbearance agreements homeowners were able to take advantage of this year. Starting in January 2021, banks will begin the foreclosure proceedings on these forbearances. This can have a positive and negative impact—a large number of foreclosures coming onto the market would impact home values negatively, but it would have a positive impact on the low-inventory situation most markets around the country face. 

We don’t think that will happen, though, because banks learned from the 2008 housing crash that they don’t want a lot of foreclosures on the books. Right now, distressed sales comprise about 3% of all sales, which is about where we’re supposed to be in a healthy economy. The point is, we don’t see foreclosures having a big impact on home values.

"We don’t see foreclosures having a big impact on home values."

The second factor is the release of a COVID vaccine. Once this vaccine is widely available, we believe it will boost our economy, and it will recover from the damage COVID has done to it. Some people who lost their jobs will get them back, others will be able to afford to purchase a home, etc. 

However, this could also increase interest rates. If the economy starts doing spectacularly well, interest rates will rise, which will price a certain segment of buyers out of the market. The vaccine’s impact on interest rates, then, could hold prices back a little bit due to buyers’ purchasing power being reduced. 

We expect inventory to tick up slightly (but still remain historically low) and interest rates to rise. That said, we expect prices to continue to increase too. Perhaps not at the 10% rate we’ve seen this year—anywhere above 3% to 5% is more likely, which is still above average.

As always, if you have more questions about our real estate market or there’s anything else the Kelly + Co. team can do for you, reach out to us today. We’d love to help. 

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