By Holly Henbest, Realtor
Happy New Year! We’re all ready to close the 2020 chapter and start fresh with 2021. Although 2020 was a tough year in countless ways, it was a positive year for real estate and 2021 is poised to generate positive results. We expect to see a continued upward trend in both pricing and overall sales. Realtor.com has predicted an 11.4% increase in overall sales in Arizona. We’re also seeing consistent reports of expected pricing gains of around 7%.
To help support the increase pricing, it was announced in December that effective January 1, 2021 the FHA and conventional loan limits would be increased. So, if you are looking to buy a home with a conventional loan, your loan limit is now $548,250. That is a 7.4% increase from the previous limit of $510,400. The FHA loan limit is now $368,000, which is an increase from the previous limit of $331,760. While this is great news for buyers to be able to afford more, it’s also great news for sellers that more buyers will be able to afford more and support the increasing home prices.
The biggest challenge with home sales in 2020 was supply. We all hope to see some increased inventory in 2021 and that is likely to happen as people feel more comfortable to get out of their homes more. So many people didn’t feel comfortable moving or having people in their home in 2020, so it impacted how many people wanted to sell their homes. Hopefully in 2021 will see more inventory due to people who held off on their plans in 2020.
For the last few years, we’ve been predicting interest rates to go up—yet they never did. To the contrary, we continued to see interest rates fall to all-time lows in 2020. So, this year the prediction is here again that we expect to see interest rates increase. That’s a prediction that will likely come true this year because, frankly, interest rates really can’t get any lower. However, we aren’t seeing anyone predict a significant increase, so hopefully it won’t have much impact on the overall market.
Keep in mind that if you’re thinking about buying a home with a loan, the better your credit score the better your interest rate, so protect your credit score and talk with a lender to get the best advice to increase your credit score, so that when you’re ready to buy a home, you can get the best interest rate possible.
Whether buying or selling a home is in your 2021 plans, we hope that you are starting off 2021 with good health and positive outlook for a fresh new year. Let’s make 2021 the best year yet.