An interesting question concerning investors for the future is that should they invest in the real estate market in 2021. There are several factors to consider, from the lower mortgage rates in the US to the increasing demand and prices of homes. In order to determine whether the real estate market is a good investment, it is essential to look at the positive and negative trends in the market.
Low-Interest Rate Environment – The pandemic resulted in a decrease of the FED Funds Rate to 0-0.25% as the FED initiated two emergency rate cuts. As a result of the drop in the FED funds rate, the big banks slashed the Prime rate to 3.25%. This resulted in the lowest mortgage rates since the housing market crash of 2008. Individuals who wanted to refinance or already had adjustable-rate mortgages benefited from the low mortgage rate environment. Adjustable-rate mortgages are linked to a benchmark index like the prime rate, as the prime rate decreased, their monthly mortgage payment also decreased. Fannie Mae released their mortgage rate forecast for 2021 and estimated that the mortgage rate will average 2.8% and will fall further towards year-end. It is estimated in 2021 that mortgage rates and the general interest rate environment will remain low creating opportunities for investment in the real estate market.
Vaccine – Vaccine news has taken the markets by storm, with Pfizer, BioNTech, and Moderna racing to get approval