2020 Outlook: Real Estate Market Forecast
We’re in the midst of the longest economic expansion in U.S. history, and economists think there’s still room to grow! A recent survey by the National Association for Business Economics found that experts believe the U.S. economy will remain positive throughout 2020.
Still, given that recessions are a natural (and necessary) part of a business cycle, we know this period of growth will inevitably end. So you may be wondering … how will a potential recession impact the real estate market?
Many Americans assume a possible recession would lead to a decline in housing prices like we saw during the Great Recession of 2008. But the real estate market crash we experienced was NOT typical. In fact, the last recession wasn’t typical at all. It was the worst economic downturn since the Great Depression of the 1930s.
So what can historical precedent—combined with today’s data—tell us about the future of real estate? Here’s where experts predict the housing market is headed in 2020 and beyond.
HOME PRICES WILL KEEP RISING
Economists predict U.S. housing prices will continue to RISE, regardless of any recession. In fact, property data firm CoreLogic forecasts a faster rate of growth for home prices in 2020 than we saw in 2019, with the biggest gains at the lower end of the market.
Entry-level home prices are expected to increase faster than incomes this year, making it more difficult for many first-time buyers to afford to enter the market.
What does it mean for you? If you have the ability and desire to buy a home now, don’t let a fear of recession or falling prices hold you in limbo. Economists expect home values, as well as rent prices, to continue rising. So you’ll likely pay more the longer you wait.
INVENTORY CONSTRAINTS WILL CONTINUE
According to Redfin, Americans are also staying in their homes longer. In 2019, the average homeowner had resided in their home for 13 years, up from just 8 years in 2010. That means there are fewer homes available today for those who want to buy.
It’s possible that an increase in new construction could offer some relief. The average price of new construction is predicted to decline slightly as builders shift to building smaller, more affordable homes.
What does it mean for you? If you’re looking to buy a starter home, be prepared to compete for the best listings. Start your search early, and if you’re up against a deadline (like a new baby), build in plenty of time to find the right home. We can help you assess your options, including new construction and up-and-coming developments.
MORTGAGE RATES WILL REMAIN LOW
Mortgage rates have declined more than a full percentage point since November 2018, when they hit a recent peak of 4.94%. The Mortgage Bankers Association predicts rates will remain low, at around 3.7%, through mid-2021.
While it may not seem significant, on a $200,000 30-year fixed-rate mortgage, that lower rate means buyers could save around $145 on their monthly payment and more than $52,000 over the life of their mortgage. Lower mortgage rates make homeownership more accessible and affordable for buyers.
Although economists expect mortgage rates to stay low, they caution against waiting to act. Economic factors, shifts in supply and demand, or unforeseen impacts of the November election could cause rates to rise unexpectedly.
What does it mean for you? If you’re looking to buy a home, act soon to lock in a historically low mortgage rate. It will minimize your monthly payment and could save you a bundle over the long term. And if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.
MILLENNIALS WILL DRIVE THE MARKET
Millennials are expected to account for more than half of all mortgages this year, outnumbering Generation X and Baby Boomers combined.
Millennials are going to be active in the housing market not just because they’re just at the age when they’re thinking about becoming first-time home buyers, but they’re also in the age range when they are starting a family.
What does it mean for you? If you’re a millennial who has been priced out of city living or is looking for more space for your growing family, I can point you towards the communities that will best meet your needs. And if you’re a homeowner with plans to sell, give me a call. I know how to market your home to millennials … and can help you sell quickly for top dollar by appealing to this leading market segment!
I AM HERE TO GUIDE YOU
While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.
If you’re considering buying or selling a home in 2020, contact me now to schedule a free consultation. I will work with you to develop an action plan to meet your real estate goals this year.
| START PREPARING TODAY If you plan to BUY this year: Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? I can set up a customized search that meets your criteria to help you find the perfect home for you. Come to my office. The buying process can be tricky. I would love to guide you through it. I can help you find a home that fits your needs and budget, all at no cost to you. Give me a call to schedule an appointment today! If you plan to SELL this year: Call me for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it will also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property, and it will help us price your home correctly once you’re ready to list. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. I can help you determine which ones are worth the time and expense to deliver maximum results. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage … and get you one step closer to moving when the time comes! |
Sources:
- NBC News –
https://www.nbcnews.com/business/economy/what-impending-recession-new-survey-shows-most-people-think-they-n1098511 - Curbed –
https://www.curbed.com/2019/1/10/18139601/recession-impact-housing-market-interest-rates - HousingWire –
https://www.housingwire.com/articles/corelogic-expects-home-prices-to-do-this-in-the-next-12-months/ - Forbes –
https://www.forbes.com/sites/alyyale/2019/11/15/2020-housing-outlook-expert-predictions-for-mortgage-rates-home-prices-tech-and-more/#343ea4522935 - National Association of Realtors –
https://www.nar.realtor/newsroom/expect-continued-economic-growth-slower-real-estate-price-gains-and-small-chance-for-recession-in - Redfin –
https://www.redfin.com/blog/homeowners-staying-in-their-homes-longer/ - HousingWire –
https://www.housingwire.com/articles/builders-are-coming-to-the-housing-markets-rescue/ - Realtor.com –
https://www.realtor.com/research/2020-national-housing-forecast/ - YCharts –
https://ycharts.com/indicators/30_year_mortgage_rate - MBA Mortgage Market Forecast November 2019 –
https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary - Dallas Morning News –
https://www.dallasnews.com/sponsored/real-estate/2019/11/23/experts-predict-where-mortgage-interest-rates-land-in-2020/ - Realtor.com –
https://www.realtor.com/news/trends/biggest-changes-coming-in-2020-real-estate-and-tips-for-buyers-and-sellers/