Is the Sacramento housing market going to crash in 2021? That’s not likely, expert says

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With the real estate market in Sacramento and elsewhere dealing with minuscule inventories, historically low-interest rates for home mortgages and slow growth in new home construction, many homebuyers are wondering if we are headed for another housing market crash.

© KCRA Housing market

KCRA 3 anchor Ty Steele spoke with Sacramento area wholesale mortgage lender Shelby Elias, with United Wholesale Lending, about what homebuyers can expect in 2021.

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Will there be a housing market crash in 2021?

Elias: “It’s a supply and demand issue, so I believe there’s a lot of runway left, and I don’t think it’s going to crash.”

How are low-interest rates affecting the prices of homes?

Elias: “Although home prices are high, interest rates are so slow that the affordability is still there. It’s simply supply and demand. There’s not enough inventory to support the amount of homebuyers. And COVID was just the straw that broke the camel’s back, and it created the current housing frenzy of interested buyers. The amount of homes that are out there is simply not enough to support the demand, whether you’re looking to buy or rent.”

What potential factors could cause the housing market to cool or crash?

Elias: “It won’t stay hot forever. But right now, there are not enough new homes being built to replenish the supply needed to meet the demand. A crash could be caused by a bubble of people not being able to afford the homes. It also might occur when the price to build a home is so much higher than the price to buy a resale home. I don’t see a crash coming. There may be a slight correction coming, but nothing is indicating a crash at this time.”

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