HOT OFF THE PRESS FROM
‘Tis the Season for Predictions: Realtor.com Is First
Economists predict a 5.7% U.S. price increase and 7% growth in sales, but a closer look at 9 Fla. metros finds varying
predictions. They range from a projected 1.5% sales growth (4.3% price) in Cape Coral-Fort Myers to 11.6% sales
growth (4.7% price) along the Space Coast.
By Kerry Smith, December 2 2020
ORLANDO, Fla. – What will the real estate market look like in 2021? In December, national economists start rolling out
their predictions, with the first, realtor.com, publishing their expectations first.
Amid COVID-19 uncertainty, 2021 will be a robust sellers’ market for U.S. buyers as home prices hit new highs (+5.7%)
and buyer competition remains strong, according to the realtor.com’s 2021 housing forecast.
Their economist expects inventory to make a slow yet steady comeback, providing buyers with some relief. However,
increasing interest rates and prices will make affordability a challenge throughout the year.
“The 2021 housing market will be much more ‘normal’ than the wild swings we saw in 2020,” says realtor.com Chief
Economist, Danielle Hale. “Buyers may finally have a better selection of homes to choose from later in the year but will
face a renewed challenge of affordability as prices stay high and mortgage rates rise. With less cash and no home equi-
ty, millennial and Gen Z first-time buyers will be impacted the most by rising home prices and interest rates. While wait-
ing until the fall or winter months of 2021 may mean more home options to choose from, buyers who can find a home
to buy earlier in the year will likely see lower prices and mortgage rates.”
Many of realtor.com’s predictions, however, assume the COVID-19 pandemic will be under control within the first half of
the year.

Realtor.com’s 2021 housing market forecast
• Mortgage Rates – Up to 3.4% by year end
• Existing Home Median Price Appreciation – +5.7%
• Existing Home Sales – +7.0%
• Single-Family Home Housing Starts – Up 9%
• Homeownership Rate – 65.9%
Realtor.com also provides a breakdown of predictions by metro area, and it varies for the nine Florida metro areas in-
cluded – from a projected 1.5% sales growth (4.3% price growth) in Cape Coral-Fort Myers to 11.6% sales growth
(4.7% price growth) in the Palm Bay-Melbourne-Titusville metro area.
2021 predictions for Florida markets
• Cape Coral-Fort Myers: 1.5% growth in sales, 4.3% increase in prices
• Deltona-Daytona Beach-Ormond Beach: 5.4% growth in sales, 6.3% increase in prices
• Jacksonville: 9.4% growth in sales, 5.0% increase in prices
• Lakeland-Winter Haven: 5.1% growth in sales, 4.9% increase in prices
• Miami-Fort Lauderdale-West Palm Beach: 3.7% growth in sales, 7.1% increase in prices
• North Port-Sarasota-Bradenton: 10.3% growth in sales, 6.6% increase in prices
• Orlando-Kissimmee-Sanford: 10.1% growth in sales, 5.8% increase in prices
• Palm Bay-Melbourne-Titusville: 11.6% growth in sales, 4.7% increase in prices
• Tampa-St. Petersburg-Clearwater: 8.7% growth in sales, 7.5% increase in prices
What 2021 will be like for buyers?
Buyers will find some relief in 2021 as more homes hit the market, but many will struggle with affordability as home
prices continue to rise. Mortgage rates will slowly rise toward 3.4% and no longer offset prices as much. The time it
takes to sell a home will slow from the late 2020’s frenzy, the economists predict, but fast sales will remain in many
parts of the country. It will also be more challenging than 2020 for first-time homebuyers.
What will 2021 be like for sellers?
Sellers will still hold the upper hand throughout 2021. Home prices won’t grow as fast as they did in 2020, but steady
increases will continue to push them to new highs. Sellers who list can expect their home to sell relatively quickly in
2021. Many sellers who are also buyers should have their next home lined up before listing.

Forecast 2021 housing trends
• Millennials will continue to drive the market while Gen-Z become market players. Older millennials will likely be
trade-up buyers while the larger, younger segment of the generation age into their key home buying years. The oldest
members of Gen-Z will turn 24 in 2021 and their impact on the market will only continue to grow from here.
• Affordability will become a growing obstacle. Buyers in 2020 received a huge boost when mortgage rates pushed to
new lows, but a lack of inventory and strong demand drove prices up, erasing most of that boost. Buyers will need to
act with a sense of urgency if they want to lock in a low rate before home prices increase even more in 2021.
•
Inventory will begin the slow road toward recovery. A lack of for-sale homes has plagued the U.S. housing market
for the last five years. The problem intensified in 2020, in large part due to an estimated shortfall of nearly 4 million
newly constructed homes heading into the year, as well as sellers pulling back due to COVID-19. The number of homes
for sale is expected to slowly rebound in 2021, but the road to recovery will be long because the market has to make
up for multiple years of declines. While additional homes will hit the market in 2021, it won’t be enough to tip the
scales in favor of buyers.
• Suburbs will shine if remote work stays around. As COVID-19 lockdowns gripped many of the nation’s largest cities,
it sparked intense buyer interest in suburban homes, further exaggerating a trend that had been slowly emerging over
the last couple of years. The big question is what demand will look like once a coronavirus vaccine is widely available.
If companies require workers to return to the office, demand may wane. Conversely, if companies commit long-term to
remote work, demand for these homes could see an additional boost in 2021.
Wildcards that could shake things up in 2021
• COVID-19: The deck is stacked with wildcards for 2021. The most impactful will be the U.S.’s ability to control and
contain the spread of COVID-19 as well as distribute a vaccine. Additional lockdowns and quarantines could put a dent
in housing inventory and sales, slowing the market and putting increased pressure on buyers. Conversely, if a vaccine
is rolled out quickly, it could lead to better than expected sales and a strong increase for home prices and inventory.
• Double dip recession: The possibility of a double dip recession is still in play for 2021. As the U.S. continues in a K-
shape recovery, a gap is widening between those with and without jobs, as well as industries recovering well versus
those seeing a continued lack of business. In the short term, this could lead to less consumer spending. In the long
term, this could impact the U.S. housing market as “would-be” buyers disappear from the market, cooling demand and
driving down home prices. The current question is how long the K-shape can diverge before the impact begins to cas-
cade into the broader economy and other previously less-affected sectors such as housing.