2020 Real Estate Market Forecast

Dated: 01/30/2020

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Here’s where experts predict the housing market is headed in 2020 and beyond.

Home PRICES WILL KEEP RISING

Economists predict that U.S. housing prices will continue to rise, regardless of a 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.3

Arch MI Chief Economist Ralph DeFranco expects entry-level home prices to increase faster than incomes this year, making it even more difficult for many first-time buyers to afford to enter the market.  “Low interest rates and a shortage of starter homes will continue to push up prices,” predicts DeFranco. “This is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry-level homes.”4

“Real estate is on firm ground with little chance of price declines,” said National Association of Realtors Chief Economist Lawrence Yun. "However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains.”5

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 staying in their homes longer. In 2019, the average homeowner had resided in their home for 13 years, up from just eight years in 2010. That means there are fewer homes available today for those who want to buy.6

It’s possible that an increase in new construction could offer some relief. The National Association of Realtors (NAR) expects single-family housing starts to total one million this year, the highest level since 2007. And NAR Chief Economist Lawrence Yun predicts the average price of new construction will decline slightly as builders shift to building smaller, more affordable homes.7

However, these efforts may not be enough to meet current demand. “Despite improvements to new construction and short waves of sellers, this year will fail to bring a solution to the inventory shortage,” predicts Realtor.com Senior Economist George Ratiu. “In 2020, we expect inventory to struggle to grow and could instead reach a historic low level.”8

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. 

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%.9 The Mortgage Bankers Association predicts rates will remain low, at around 3.7%, through mid-2021.10

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. “We recommend borrowers with long-term plans of staying in their homes to lock in a low rate now because there’s no telling how long these low rates will last,” warns Preetam Purohit, a capital markets trader at Embrace Home Loans.11

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.

WE’RE HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As a local market expert, I 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 as soon as possible. I'll work with you to develop an action plan to meet your real estate goals this year.  Even if you aren't thinking of buying until the summertime, let's get a plan in place now, so that we can hit the ground running

START PREPARING TODAY


If you plan to BUY this year:

  1. Get pre-approved for a mortgage.  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, or what you can borrow based on where you want your payments to be, and budget accordingly.  If you don't have a lender to work with, I have an excellent referral for you - just ask! 

  2. 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? Make a list of needs vs wants.  We can set up a customized search that meets your criteria to help you find the perfect home for you - just ask!

  3. Let's meet up and chat.  The buying process can be tricky and most buyers have a ton of questions. It would be my pleasure to guide you through the buying process and answer any and all questions that you may have. Call, text, or email me and we can schedule a time to meet up and chat about the process, your questions, and your needs and wants in a new home. 

If you plan to SELL this year:

  1. 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 (using sold and active listings). 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.

  2. Prep your home for the market. Most buyers want a home they can move into right away, (turn key), without having to make extensive repairs and upgrades. We can help you determine which ones are worth the time and expense to deliver maximum results.

  3. 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:

3. HousingWire  -

https://www.housingwire.com/articles/corelogic-expects-home-prices-to-do-this-in-the-next-12-months/

4. Forbes -
https://www.forbes.com/sites/alyyale/2019/11/15/2020-housing-outlook-expert-predictions-for-mortgage-rates-home-prices-tech-and-more/#343ea4522935

5. National Association of Realtors -
https://www.nar.realtor/newsroom/expect-continued-economic-growth-slower-real-estate-price-gains-and-small-chance-for-recession-in

6. Redfin -
https://www.redfin.com/blog/homeowners-staying-in-their-homes-longer/

7. HousingWire -
https://www.housingwire.com/articles/builders-are-coming-to-the-housing-markets-rescue/

8. Realtor.com -
https://www.realtor.com/research/2020-national-housing-forecast/

9. YCharts -
https://ycharts.com/indicators/30_year_mortgage_rate

10. MBA Mortgage Market Forecast November 2019  -
https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary

11. Dallas Morning News -
https://www.dallasnews.com/sponsored/real-estate/2019/11/23/experts-predict-where-mortgage-interest-rates-land-in-2020/

Realtor.com -
12. https://www.realtor.com/news/trends/biggest-changes-coming-in-2020-real-estate-and-tips-for-buyers-and-sellers/

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Katrina Williams

Photography, softball, and the outdoors are my thing. My husband and I play both league softball and in tournaments. We enjoy taking our trailer out camping on the weekends, especially to the beach. ....

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