The news: Seattle-based real estate company Redfin is forecasting record U.S. home sales of $2.53 trillion this year, saying in a report Tuesday that the 17% year-over-year gain would be the biggest percentage increase since 2013.
What’s driving the market?: According to Redfin, the housing market’s “meteoric rise” during the COVID-19 pandemic has been fueled by low mortgage rates, high demand, and a wave of migration made possible by remote work. March was especially hot, with home values, price growth and selling speed all hitting new heights. Redfin reported the national median home-sale price hit a record high of $353,000 in March, up 17% from 2020 — a record high rate of growth.
Seattle area also surging: The Seattle Times reported last month that the Puget Sound region’s housing market is “on steroids” as prices were up and inventory was disappearing. In March, the median King County home sold for $824,997.
Post-pandemic outlook: “We expect 2021 to be an even more active year for the housing market than 2020 because homebuyers have a better sense of what the future looks like,” Redfin Chief Economist Daryl Fairweather said. “Employers are providing clarity on permanent remote-work policies, the economy is recovering and mortgage rates remain low. All of these factors mean that we’ll likely see even more buyers enter the market this year and in 2022.”
Tailwinds for Redfin and Zillow Group: Redfin CEO Glenn Kelman said last week that the company scrambled in the second half of 2020 to hire enough agents and lenders to handle a pandemic-driven surge in demand, and is now “just about hitting on all cylinders.” The company saw a 40% surge in revenue in the first quarter, reporting $268 million in sales.
Zillow is also benefitting from the strong U.S. housing market, posting $1.2 billion in revenue last week for Q1, up 8%. CEO Rich Barton said trends the company has been talking about are playing out.
“Across the country, Millennials are moving up, Baby Boomers are downsizing, and in between, people of all generations are rethinking their lives in a cultural phenomenon we have termed the Great Reshuffling,” Barton said. “Millions come to Zillow to surf and dream …”
Methodology: Redfin based its 2021 forecast on the number of U.S. home sales it expects this year (roughly 7.5 million) multiplied by the expected average price of those homes ($333,333).