There is no place like home. The nature of the crisis this year has emphasized that fact. Even though we love our family members, we all need our space. We expect housing demand and the housing market to remain quite strong in 2021 for those fortunate enough to work in industries that are currently shielded from job loss, while also being more amenable to remote work.
Mortgage rates are at record lows, and many households have realized they need more or different housing than was the case at the beginning of this troubled year.
That is why with robust demand for refinancing and home purchases through the end of this year, MBA forecasts mortgage originations to close out 2020 at more than $3.2 trillion – the most since 2003’s $3.8 trillion.
2020 has been one of the most challenging years in the history of our country. However, the real estate industry should be proud of how rapidly participants moved to ensure home sales transactions and refinancings could take place safely – and with minimal disruption. Our market truly has been one of the very few bright spots of the economic recovery. Millions of homeowners have saved money through refinancing, mortgage servicers have helped over 5 million homeowners stay in their home by offering forbearance, and following a sudden halt in the spring, home sales are booming.
What will the 2021 housing market bring?
Mortgage lenders are operating in a period of heightened uncertainty, given the still unknowable course of the pandemic, and a somewhat hesitant economic recovery. Given this uncertainty, business leaders in our industry – now more than ever – need to consider alternative scenarios in respect to the challenges and opportunities that will drive the pace of activity in the year ahead.
Our expectation is that 2021 will most likely be a year of a continued, but slow economic recovery, with a modest rise in mortgage rates, and the stubborn, ongoing housing market conundrum of inadequate supply in relation to demand. Home prices have risen more rapidly than incomes for years now, and the many challenges that have slowed homebuilding will continue to push home prices higher. The combination of these factors should lead to growth in purchase volume and a falloff in refinances.