As of March of 2021, the short answer is, “no”. In March of 2020, the real estate market looked to be headed into a steep decline due to widespread stay-at-home orders. Since then, homebuyers, supported by low-interest rates, have kept the US housing market going at a frenzied pace.
2020 was a record-breaking year for the US housing market. The typical U.S. home was worth $266,104 in December, up 8.4% (or $20,587) from a year ago. A total of 5.64 million homes were sold in 2020, up 5.6% from 2019 and the most since before the Great Recession, according to Lawrence Yun, NAR’s chief economist.
The reason is that there has been far less homes available to meet demand for the past decade. The housing market in 2021 has seen buyers desperate to purchase nice homes from which to tele-commute which has driven up home prices by double-digits and causing homes to sell quickly in competitive market conditions. Currently in the eastern part of the San Francisco Bay Area where I practice, home prices are going up at 2.5% a month!
This condition is expected to continue until either the housing supply or interest rates increase dramatically. With the pandemic easing more sellers seem willing to put their homes on the market and an improving economy is putting upward pressure mortgage rates so the home buying frenzy may ease somewhat in the near future.
So, could there be a decline in home prices in the future? Probably, since home appreciation in the U.S. has never been a straight-line functional although the trend has been continuously upwards.
Will we see a drop in prices like in 2008-2012? Probably not since lenders are much more strict about their mortgage loan criteria and interest rates as well as housing inventory are at historic lows. If you are waiting for homes to become more “affordable” it’s likely going to be a long time before that ever happens.