There is a lot to be optimistic about when it comes to Northridge, CA Real Estate. A year ago, the forecast was dire as the stock market plunged, unemployment soared, and the government scrambled to release the first Coronavirus Aid, Relief, and Economic Security Act (CARES). Many were afraid that the housing market would spiral down like it did in 2008.
The challenges spurred by the global health crisis have caused many people to take a step back and evaluate their lives. Do they really need a huge house? Is living in the city still better than a slower pace of life in the country where social distance is easier? These are all questions being pondered by homeowners and potential buyers in 2021. The coming year is going to prove interesting for Northridge, CA Real Estate as not only the state of California undergoes changes but also families choose to take different directions when it comes to picking a home.
Let us dive into the reasons to be optimistic about Northridge in the coming months.
Why Be Optimistic about Northridge, CA Real Estate in 2021?
Three simple factors are the leading reasons to be optimistic about Northridge, CA real estate in 2021. All are pointing to an impressive year that gets better with each passing month.
1. An Improving Economy
With the release of the second-quarter report by the Federal Reserve, things are looking brighter than forecasters imagined.
- » The 2021 gross domestic product has increased more than 50 percent compared to the December estimate.
- » Interest rates continue to hold steady.
- » GDP will more than likely increase 6.5 percent before starting to level out in the remainder of the year.
- » Wells Fargo has successfully beat expectations with its first-quarter revenues and earnings. The bank leaders are overly optimistic about the lending growth, and stocks are soaring as a result.
- » Twenty-two million lost their jobs in 2020, but employment is improving, with only 9 million still out of work.
The Federal Reserve's statement, "Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak. Inflation continues to run below 2 percent."
2. Interest Rates Will Stay Low for the Remainder of the Year
If you plan to purchase a home, then it's an ideal time from the perspective of interest rates. Fed-controlled rates are supposed to remain range-bound.
"The fed funds rate is pinned to the floor of 0 to 0.25 percent until 2023 or so, but an equal part of the Fed's strategy is keeping longer-term interest rates low," says Greg McBride, CFA, Bank rate chief financial analyst.
Short-term rates can change, but the Feds do have some control in keeping the rates where they want them by purchasing debt.
McBride goes on to say, "Expect the Fed to shift to more purchases of long-term bonds to keep a lid on mortgage rates in particular and facilitate more mortgage refinancing when millions of homeowners can cut their payments by $150, $200, $300, or more per month, that has a very stimulative effect on the economy."
3. Home Sales Will Grow
With the improving economy and low interest rates, home appreciation will also grow as per the Northridge real estate experts. They expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring, and sustaining the pace in the second half of the year.
NAR chief economist Lawrence Yun stated in an interview with the Washington Post that he predicts new-home sales will jump 21 percent and existing-home sales will climb 9 percent in 2021. He predicts home prices will rise by 3 percent in 2021.
"The consequent rise in home prices has boosted wealth accumulation for homeowners," Yun said. "But the opposite side of this will mean the continued decline of housing affordability and will limit future homeownership opportunities for young adults if housing supply is not greatly increased."
"The Biden presidency could bring several impactful changes to the housing market," Yun continues. "The home buyer tax credit he proposed as a candidate would help Americans cover their down payment costs and is the likely firmer assurance of government guarantees to mortgages backed by Fannie Mae and Freddie Mac. In addition, new appointees at the Federal Reserve are likely to pursue an expansionary monetary policy for a longer period, which should keep interest rates stable over the next few years."
Northridge, CA Real Estate in 2021 will continue being continually active. Ultimately, whether you are a home buyer or seller, now is the time to take advantage of the situation.
Contact Mel Wilson & Associates, your Northridge, CA real estate experts, to learn more or call our experts today (818) 993-4606.