Housing Market: Redfin Expects Home Sales Will Top GDP of France

The housing market is firing on all cylinders, and it’s revving up for a home sale record. Redfin is forecasting $2.5 trillion in U.S. home sales this year. That’s more than the GDP of France, and about equal to the combined value for Amazon.com and Facebook. Redfin says home sales will probably rise about 17% year-over-year in 2021. That would be a bigger jump than we saw during the pandemic last year, when demand skyrocketed for single-family homes. It will also be the biggest jump in sales since 2013. As we’ve been reporting, the housing market has gone through a huge transformation because of the pandemic. It brought mortgage rates to a record low and triggered a migration of people to new markets because of the remote work trend. In April, Redfin conducted a survey among remote workers and about 60% of those people expect to continue working from home at least part time. That kind of shift is work habits and demand for work-at-home space has helped to push home sales higher. And that’s despite a critically low inventory that is also pushing home prices higher. March has already set several new records in the housing industry including home values, sale price and number of days on the market. If mortgage rates rise, home price growth may slow down a bit. Redfin Chief Economist Daryl Fairweather says that would give us a more balanced market and would also lead to MORE home sales. He says: “We expect 2021 to be an even more active year for the housing market than 2020 because homebuyers have a better sense of what the future looks like. Employers are providing clarity on permanent remote work policies, the economy is recovering and mortgage rates remain low. All of these factors mean that we’ll likely see even more buyers enter the market this year and in 2022.” Where will we see most of these buyers? This forecast points to the South. Redfin expects $1.09 trillion worth of home sales in the South, $696.3 billion in the Westl $422.6 billion in the Midwest, and $322.8 billion in the Northeast. Although it’s common to see the South in the top spot, Redfin says its lead has grown. Fairweather says: “A lot of the wealth from the coasts is shifting South.” He says: “Affluent homebuyers from New York and San Francisco have moved to places like Florida and Texas during the pandemic.” That has also driven sales, and prices, higher in those areas. Redfin isn’t the only one forecasting more than a trillion dollars in home sales. HousingWire reports that Freddie Mac and the Mortgage Bankers Association are also on board for record high sales. Freddie Mac is forecasting $1.7 trillion while the MBA is forecasting $1.67 trillion. They both expect “favorable” conditions for the housing and mortgage markets to continue, although economists expect demand could slow down a bit if mortgage rates rise in the midst of a hot economic recovery. The MBA’s chief economist Mike Fratantoni expects the 30-year fixed-rate mortgage to hit 3.7% by the end of the year while the GDP jumps to 6.5%. Fannie Mae’s chief economist, Doug Duncan, told HousingWire that we’ll see more and more people entering the housing market as the COVID-19 vaccination program expands. Currently, a little more than a third of the U.S. population has been fully vaccinated, so we still have more than 200 million people who are not. Duncan says that consumers are looking forward to life after the pandemic, which could mean a new home. And for many, it means a second home. Redfin says that demand for second homes is more than double what it was before the pandemic. It says the number of buyers who took out a mortgage for a second home was up 178% year-over-year this April. And the increase was the 11th month that the numbers were higher. It also says that the record high increase is somewhat distorted because demand for second homes was down 24% in April 2020 when the economy had shut down. But Fairweather says demand for second homes has been elevated because the wealthy have become wealthier this last year, and the low mortgage rate environment has given them a perfect opportunity to buy vacation homes where they can also work, if they need to. You’ll find links to both reports on the podcast player page for this episode at: NewsForInvestors.com Click here to join the network for free Links: https://www.prnewswire.com/news-releases/us-home-sales-likely-to-hit-record-high-of-2-5-trillion-in-2021--301288413.html https://www.prnewswire.com/news-releases/demand-for-second-homes-is-more-than-double-pre-pandemic-levels-301287673.html https://www.housingwire.com/articles/south-poised-to-see-1-trillion-in-home-sales-in-2021/