Housing market will stay strong
Danielle Hale, chief economist for Realtor.com, discusses the outlook for the housing market.
Q: In 2020, tight inventories drove up the price of homes. Will that continue in 2021?
A Yes. There have been more buyers than homes for sale for the past five to 10 years, so it’s not a new phenomenon. We won’t see the double-digit price growth we saw in 2020, but we do expect prices to rise because we anticipate that inventories will continue to be relatively low.
Our forecast is for the median home sales price to rise by 5% to 6%, and for the overall number of homes for sale to continue to decline.
However, the rate of decline should slow, and we may even have an increase by the end of the year as we see more sellers than in 2020. The housing market in 2021 will look a lot more normal than in 2020.
Q: What about demand? Will it remain as strong in 2021 as it was in
Anybody who has applied for Social Security benefits knows that the system’s regulations are complex. Unfortunately, many employees of the Social Security Administration (SSA) find them confusing as well, and as a result they sometimes make mistakes that lead to lost benefits for eligible beneficiaries.
In November, the SSA Office of the Inspector General reported on audits that revealed that some Social Security beneficiaries had not been receiving benefits they are entitled to. I’ll focus on two such situations.
The first is individuals who applied for their Social Security benefits prior to their full retirement age (FRA) and had their Social Security benefits reduced because they earned more than specified minimum income levels.
For example, in 2020 your Social Security benefits would have been reduced $1 for every $2 you earned more than $18,240. However, according to Social Security regulations, after you reach your FRA, SSA recalculates your benefit amount to give you credit for the months it reduced or withheld benefits due to your excess earnings.
The audit report showed that 7,477 beneficiaries who had monthly benefits reduced for work after January 2000 did not receive a benefit adjustment after they reached their FRA.
If your benefits were reduced because you applied for Social Security benefits prior to your FRA, you should determine whether or not your benefits have been adjusted properly. If that is the case, contact the SSA and ask that you receive the proper adjustment. Refer to audit A-09-18-50685.
The second type of case is individuals who may be eligible for a survivor benefit but were subject to a government pension offset (GPO), which reduces survivor benefits for employees who were eligible for a pension from work not covered by Social Security.
If you receive a pension from a federal, state or local government based on work not covered by Social Security, your government pension may reduce your Social Security benefits. Such pensions also reduce or offset Social Security spousal benefits, such as survivor benefits. The amount of the reduction for a survivor benefit is two-thirds of the government pension.
You are eligible for a Social Security survivor benefit as early as age 60. If you apply for a survivor benefit at age 60 or any time prior to reaching your FRA, an SSA representative must explain the advantages and disadvantages of filing an application, so you can make an informed decision. Although you may not be eligible for a survivor benefit at 60, or a reduced benefit, your SSA representative should inform you that if you wait until your FRA, you may be entitled to a larger survivor benefit.
Unfortunately, the audit found insufficient evidence that SSA had properly informed claimants of their option to delay, or withdraw and resubmit their application for a survivor benefit, as required. The audit estimated that 1,938 widow(er)s would have been eligible for about $12.8 million had they delayed their application up to their FRA. In addition, 1,615 could receive about $42.6 million in additional benefits over their life expectancies. On average, the audit dence. However, some smaller insurfor weeks, even months. showed that each widow(er) could ance companies, such as American Your liability coverage may also need receive an additional $26,400 in beneModern and Foremost, will insure a to be fits.increased.“Youaren’tthereso secondary residence alone. there’s an opportunity for trouble, like According to Social Security regula
Insurers generally do not include kids setting off fireworks in your backtions, you can withdraw your survivor secondary homes as part of their stanyard,” Henaghan says. application and reapply later as long as dard bundle discounts, which let you Someone with two homes may it hasn’t been longer than one year since save money by buying multiple policies also have a higher net worth than the you applied. Don’t wait to hear from an — like home, auto and life insurance — liability coverage limit on a standard SSA representative. If you applied less from the same company. But it’s always homeowner’s policy. By purchasing an than a year ago, discuss with an SSA worth asking if an insurer will give you umbrella liability policy, you could get representative whether it will benefit a discount for insuring two homes. an additional $1 million in coverage for you to withdraw your application and
One extra benefit you may want to a few hundred dollars a year. Henaghan reapply later. add to your policy is water backup recommends purchasing enough If you haven’t applied for survivor coverage. “According to Travelers’ data, umbrella liability insurance to cover benefits because of the GPO offset, I
20% of homeowner’s insurance claims your total net worth — including both recommend that you contact the SSA result from water damage unrelated to homes, your vehicles and retirement to discuss the advantages and disadweather events, including frozen pipes savings — against potential lawsuits. vantages of filing for a survivor benefit. that can lead to leaks,” Meisinger says. Refer to Audit A-09-19-50791.
If your house catches fire while you’re in another state, chances are you’ll get a phone call, but you might not discover the damage from a burst pipe
2020?
A: I think we’ll see normal levels of demand in 2021. There will be some boost from buyers trying to take advantage of low mortgage rates, but we won’t have as much of that “make-up” buying from people who missed out in spring 2020 during lockdowns.
Q: The housing market was strong in 2020 despite high unemployment and an economic downturn. What drove the market?
A: The housing market kind of followed the economic trajectory. The economy was doing reasonably well in January and February. Then, in March, as we started to see cases of coronavirus really start to spread and economic activity fall off a cliff, we saw a big pullback in the housing market. But while the economy only started crawling back, the housing market was pretty quick to bounce back.
Q: Do you expect the trend of people moving away from urban core areas and into the suburbs to continue in 2021?
A: I do expect that to continue because people are looking for affordability and they’re also looking for more space. The trend of buyers looking to the suburbs was happening even before the pandemic, and the pandemic kind of put it into hyperdrive. I think we’ll continue to see people moving to the suburbs but at a more normal pace.
Q: How has the pandemic affected the process of buying and selling a home?
A: The industry has done a remarkable job of doing business in a socially distant way. We’ve seen an increase in listings that have virtual tours, and agents have started doing livestreamed open houses. But a home is, for most people, the largest purchase they’ll ever make.
So although the transaction has become more virtual, people still want to see a home in person at some point — if not before they make an offer, then certainly after they make one.