With mortgage rates at historic lows and home prices steady, here’s what you should know if you’re planning to buy in 2021

Husband and wife with their young kid are looking at new houses

Perhaps you considered moving to a new home in 2020 but didn’t because of uncertainty over the pandemic. But 2021 is a new year, and you’re ready to buy. While mortgage rates remain at historic lows and home prices are steady, should you buy now or wait a while longer? Here’s some information to help you decide.

Mortgage rates should remain low.

Mortgage interest rates have trended downward throughout 2020. Economists say that while rates may head back up in 2021, they’ll still be lower than they’ve been over the past several years.1 This means you can take advantage of conventional 15- or 30-year fixed-rate mortgages at low rates. That way your monthly payment will stay the same over the life of your loan — no matter what the market does.

A young couple taking a selfie in front of their dream home

Home prices remain steady but should begin to drop slightly in the second half of 2021.2

While home prices are expected to fall slightly in July 2021, economists say this will not affect all markets in the same way. Housing pricing will depend on many factors, including how each state recovers from the pandemic. Once you decide to move forward with your home search, start by getting pre-approved for a mortgage so you can pinpoint your price range and narrow down the neighborhoods within your budget.

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Housing inventory is low but may improve.

Simply put, there are fewer homes than buyers in the market. While the number of new home listings has increased, these homes are quickly sold to eager buyers. If you’re pre-approved, you can compete more effectively in the race to buy a home. For example, if you’re pre-approved and in the middle of a bidding war for a home, you’re more likely to get the house over another buyer because you’ll already know the price range of the loan for which you’re approved.3

A real estate agent is an essential part of the buying process.

With home inventory low and the search process still virtual in most markets, using a real estate agent to find the right home is critical. Your agent will help you navigate the trends in your area, find the best options to match your needs and negotiate the best deal possible with the seller.

A young couple checking on their phone in the model home

The bottom line.

It’s hard to predict what will happen with the housing market as things continue to change from one month to the next. Much will depend on how quickly the economy recovers from the pandemic, and the housing market plays a crucial role in that recovery. So whether you plan to invest in real estate or buy your dream home in 2021, it’s best to begin with a pre-approval in hand — and we’re ready to help. Contact your Home Mortgage Consultant or find your local consultant to get started.

Learn more about Wells Fargo mortgage loans.

1 https://www.kiplinger.com/article/business/t019-c000-s010-interest-rate-forecast.html

2 https://www.nationalmortgagenews.com/news/2021-home-price-forecast-anticipates-a-drop-next-year

3 A preapproval is based on our preliminary review of information provided and limited credit information only and is not a commitment upon verification of application information, satisfying all underwriting requirements and conditions, and property acceptability and eligibility, including appraisal and title report. Preapprovals are subject to change or cancellation if a requested loan no longer meets applicable regulatory requirements. Preapprovals are not available on all products. See a home mortgage consultant for details