Will There Be A Real Estate Crash In 2021?

Zelman & Associates predicts we’ll have an increase of 3% in home values in 2021. CoreLogic reports differently. They believe there could be more than a 6% decline in property values. Given the opposing predictions, we’re left to decide which of these two reports is right.

For the record, I hate talking about the coming real estate crash. It’s like the perpetual American doomsday. And for some reason, people are drawn into discussions on bad things right around the corner. But based on the numbers I look at, there’s no clear indication whether a crash will happen. I mean, just looking at the stock market, crashes happen ALL THE TIME!  Way more than what happens in the real estate market where crashes hardly ever happen. 

However, it’s also not impossible for a real estate decline, given the uncertainty around the coronavirus restrictions. What does a shutdown mean to the real estate market? Would there be a signifant depreciation of home values?

Remember, the coronavirus itself did not create any economic impacts. It’s the government that created harm and could create much more. We SHOULD blame the government for its poor leadership, compromising the livelihoods and actual lives of millions of Americans by having us live in fear of what Fauci rightly called a “severe flu” back in February…before he realized there was much fame to be had by being Dr. Doom.

By the way, the Federal Housing Finance Agency (FHFA) released its latest report about the Home Price Index last week. Based on the report, it shows home prices rose 6.5% from the same time last year. FHFA also noted the price appreciation accelerated to record levels over the same months over summer (between May and July 2020).

In addition, the national prices also increased by 2%. This represents the largest 2-month price increase observed since its first index in 1991. In summary, these are the projections of home prices over the next 12 months.

  • Zelman – 5.9%
  • Zillow – 4.8%
  • Fannie Mae – 4.4%
  • NAR – 4.3%
  • HPES – 3.7%
  • MBA – 3.4%
  • CoreLogic – 0.6%

If you take a look at the figures, the pandemic actually weathered the storm a lot better than one would have thought in regard to home values. I know a neighbor who’s listing their house for sale. It’s about two houses down from mine. They’re listing the property for $100,000 more than they paid just two years ago. 

That seems crazy but according to my man, Doug Schauf of Make Maine Your Home, as long as the supply doesn’t catch up with the demand, the prices will continue to skyrocket.

Now it’s clear that the real estate market will be less likely to experience a crash compared to the stock market. That also gives you an idea which of these two could be a smarter investment choice.

My advice? Just don’t listen to naysayers. I don’t think there would be a real estate crash in 2020, not in 2021. As I said earlier, it’s unlikely for the housing market to suffer because of the ongoing economic collapse, people still need a place to live after all.

 

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