You might remember when we talked about home price change during the last five recessions, and how recession does not equal housing crisis. Everybody remembers the housing crisis of 2008, where homes lost almost 20% of value and yet, when we look at prior recessions, we see it’s just not the case. Now we have this year’s numbers that have come in from the CoreLogic National Home Price Index, showing home prices rose 7.3% according to CoreLogic in 2020.  As you can see, 4 out of these 6 recessions home prices actually appreciated.

The truth of this story right now as we kick off 2021 and all the things that happened in 2020 is that appreciation of 7.3% has grown home equity. Through the past year, home equity has been critical to people across the country in a lot of different ways, in ways that they’ve used it maybe to weather the financial storm, to have the ability to go out and sell their home if they needed to and not be underwater and literally have to go into foreclosure.

The most recent home price expectation survey shows us that over the next five years, the average $300,000 home, if purchased today, that homeowner stands to gain in appreciation about $50,000. $54,221 in appreciation, adding to that equity.

That equity provides opportunities to people, whether it be to start a business, to send a child to school, etc. The idea of home equity is something that as we look back, and we look forward, is certainly the benefit of home ownership today. 

These financial benefits have gotten stronger through the pandemic for homeowners across the country.

Here is the 2021 Home Price Forecast, we can see here, anywhere from 2-6% from NAR to MBA and everything in between, if we take out the two on the end, we see probably between 3 and 4% home price appreciation. 

Now what does this mean?  This is giving a sign to more inventory coming in the market, whether that comes from builders, people putting their homes on the market that didn’t last year, or even those affected by the pandemic that may need to sell their home.  No matter the circumstance, more inventory will be coming back to the market and in turn helping to keep in check home price appreciation. 

Now a lot of the above is going to depend ultimately on economic recovery, which is a question on a lot of people's minds.  

It’s just a few months ago where we were talking about the comparison to the Great Recession and even the Great Depression, relative to unemployment. If you remember, we talked about the more depth, less length slide. 

In yellow, that’s the actual unemployment drop there and we know we hit almost 15% unemployment in this country, but for a very, very short time. Then we see that V recovery in unemployment.  

According to Wall Street Journal and the Fed, we show both of those right here in blue and in green, somewhere between three and five years to get back to where we started in this country before that pandemic and unemployment. You can see those actual projections right here, going into 2021, 2022 and 2023, where we’ll be. And you see this slight decrease in unemployment as time goes on. 

Where we stand today, 6.7% unemployment in this country is not a good thing however it is certainly not at the high of 15% like we experienced towards the middle of last year.

the other thing is the reality of where we stand today, which is that Treasury rates have been moving up since the election, according to the MBA however, mortgage rates have kept going down. That’s because the Federal government is pinning down mortgage rates by all the action they’re taking in the secondary bond market. 

The outlook as the economy improves is that rates will rise. As we look into this year, and we look into 2022, we have to ask -what is going to happen there? We’re calling for home price appreciation. Experts are saying mortgage rates are going to rise. Certainly, we think from what we see from experts is that we will be in a good mortgage environment but they’re going to rise. With that, the KCM team made a calculation based upon where interest rates are today, and where with appreciation and interest rates a year from now, where could we potentially be. 

Most experts would say, what’s driven homeownership in 2020? Well, needs have changed as well as the low rates. But as we look forward, those aren’t going to hang around forever.

In the Town of Hingham, the number of new homes entering the market has continued to decrease month over month.  Homes spent less time on the market during the last month of the year. The Average Sale Price has remained in the million dollar bracket for the last 3 months.

In the Town of Marshfield, the number of homes sold remained consistent month over month. Properties are continuing to spending just about a month on the market.  The Average Sales Price has increased from $591K in November.

In the Town of Duxbury, the Average Sale Price of homes has drastically increased since November but still remains below the million dollar bracket.  Available inventory has decreased and there were no new offerings in the last 30 days. The Average Days on Market decreased by half (40 in November).

In the Town of Cohasset, the amount of available inventory has remained consistent over the last three months which shows a steady market.  The number of days on market has decreased significantly from 67 in November.  The Average Sale Price remains in the million dollar bracket month over month, slightly lower than November. 

In the Town of Pembroke, the current amount of available inventory is very slim.  Down from 14 homes available in November.  There have been no new offerings within the last 30 days which could likely be attributed to the holidays. The Average Days on Market continued to decrease from 30 days in November. The Average Sale Price has also decreased from the $515,000 in November.

In the Town of Bourne, the amount of available inventory has continued to decrease month over month as the holiday season approached.  The Average Days on Market has remained consistent since October which tells us that the buyer demand is there however the lack of inventory is hindering them buying at an even faster pace.  The Average Sale Price has increased since November which is a great sign for home values as the same amount of homes have sold month over month.

In the Town of Mashpee, the Average Sale Price has decreased out of the million dollar bracket, back to lower average prices than we saw in October at $801,000.  The Average Days on Market have decreased again from 89 in October.  The number of homes sold has remained fairly consistent since July with just a slight decrease from November to December.

In the Town of Chatham, home sales continued to slightly increase since October. The market in Chatham is remaining consistent with throughout the last three months.  The Average Sale Price has remained in the million dollar bracket over the last 4 months with a slight increase from $1.1M in November.  Homes are also spending less time on the market.