What does the real estate market have in store for home buyers, sellers and owners on the West Coast this year? Many national real estate forecasts for 2021 have been published, but the West Coast, like every part of the country, follows its own trends. We asked Daryl Wizelman, Draper and Kramer Mortgage’s West Coast-based Executive Vice President, four important questions about what’s ahead for real estate in the region. Here’s what he had to say.
Q: What trends should homebuyers and sellers expect for the real estate market?
A: California will continue to see value growth as demand continues to outpace supply. The average home sale price in California has moved above $700,000 for the first time, home values are predicted to increase by 10.6% over the next year, and mortgage interest rates will continue to be low. California will also see more homebuyers shift demand from urban to suburban markets as more of the workforce are able to work from home. In addition, people are preferring to live in areas that are less populated in the event of another health crisis.
Nevada will also continue to see value growth as more people retire and others move to Nevada to avoid state income taxes, and they’ll continue to experience low interest rates.
If COVID-related cases and deaths decrease during 2021, we will see increased demand in homes and thus, a surge in home sales in both states.
Q: What predictions and advice on mortgages do you have for homebuyers and homeowners?
A: Low mortgage interest rates have a much bigger positive impact on a homebuyer’s purchasing power than the acquisition price, so buying in a low-interest environment is strongly encouraged. Rates are predicted to remain low through 2021, so this will be an excellent time to buy.
Because of low rates and increasing home values, buying sooner rather than later is strongly recommended. Many homeowners may use their “sweat equity” to buy up to their next home. The first step in that process is to get into the market as soon as possible.
Q: What opportunities should first-time homebuyers look for?
A: The number one opportunity for first-time homebuyers is low mortgage interest rates. Buying while rates are low can allow first-time homebuyers to buy more home than when rates are higher. In addition, values are increasing, so getting into the market is a must.
The adage “location, location, location” is one key to ensure homes are desirable to future buyers. Buying the worst home in the best neighborhood will continue to be a strong recommendation.
Q: What lasting changes do you think COVID-19 has had on home buying, selling and financing, and what has remained the same?
A: In 2020 and now 2021, homeowners are remodeling and improving their properties in ways they otherwise wouldn’t, because they are spending more time at home due to COVID-19. People are also moving to the suburbs as opposed to living in urban areas in order to live in less-populated areas in the event of another health crisis. New property tax laws in California (Prop 19) enable buyers to move up with a mitigated property tax increase.
The most important aspects of buying, selling and financing that remain the same despite COVID-19, includes the importance of the location of the home, buying when interest rates are low and getting into the real estate market as soon as possible since real estate continues to a great way to grow wealth.
Are you planning to buy or refinance a home on the West Coast in 2021? Contact us to get started with a free mortgage review from one of our local home financing experts.