2020 Real Estate Trends
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Whether you’re looking to sell or buy a home this year, it’s important to look at your local real estate market in addition to national trends as predictions can vary from area to area.
At the end of the day, no one really knows how things will work out with home prices, interest rates, and inventory but here’s what we’re keeping our eyes on in the housing market as 2020 progresses:
More Inventory Struggles
The low housing inventory has been a pain point for many home buyers across the U.S. over the past few years. In fact, the supply of houses hit an all-time low in 2017 and still hasn’t bounced back. Because of this, home prices increased and many home buyers were caught in bidding wars.
There’s still a lot of work to be done to relieve the stress of finding a home for first-time home buyers—inventory for this market is expected to remain tight nationally throughout the year. It’s predicted that one in four offers will face bidding wars in 2020 compared to only one in 10 in 2019.**
- If you’re planning to build in 2020, construction has been slowly rising but houses are not being built fast enough to keep up with demand. New home construction is expected to increase by 4% in 2020.* The focus will be more on mid-range homes, but this should still help first-time home buyers because starter homes will begin to free up as people upsize.
- We may also see a rise in homeowners staying put and making home improvements to their current home by cashing out equity to expand or update their home and avoid a move.
- Baby boomers are expected to continue to age in place which keeps inventory tight. A small percentage might decide to downsize in order to find more accessible homes (e.g., one-story, or minimal stairs) or to look for a place with less maintenance.
In short, home prices are expected to rise on a national basis in 2020 but at a slower pace than in year’s past. This slowdown may bring some relief to home buyers, especially as employment numbers remain strong and there’s a healthy wage growth. Even with rising house prices in most areas, experts are predicting the number of homes sold this year will be equal to or exceed 2019.**
- The national median existing home price is forecasted to rise to anywhere between 0.8%-4% in 2020,** according to a variety of experts.
- Affordability for first-time home buyers will remain a concern throughout the year due to the lack of starter homes but those looking to upsize will have more options.
- If you’re looking to buy a home, it’s essential to find out how much you can really afford. It’s easy to crunch the numbers with our handy mortgage calculator so you can figure out a monthly payment you feel good about. Any way you slice it, it’s important to have a plan and a budget and stick with it.
Low interest rates have been the norm for the past 10 years so it can be alarming to see rates rise. We completely understand that fluctuating interest rates are always a hot topic for potential home buyers! As we all know, interest rates are unpredictable and can be difficult to pin down.
- Rates remained relatively low in 2019. 2020 is expected to bring more of the same. Although, there are fluctuations expected due to global and geo-political turmoil.
- The latest projections from the Federal Reserve show no additional cuts in the federal funds rate in 2020. But keep in mind, this could change since the Fed met weeks before hostilities in the Middle East ramped up. And of course, we have no way of knowing how long this crisis will last.
- The U.S. economy is remaining strong with low unemployment rates and wage/income growth. While the Federal Reserve doesn’t set interest rates for mortgages, it does determine the federal funds rate which generally impacts short-term and adjustable interest rates. So, when this rate increases, the rate at which financial institutions lend money changes.
You can always protect yourself from the rise and fall of rates by becoming Rate Secured. You’ll be able to secure a low interest rate at no additional cost, cap your rate for up to 90 days while you shop for a home, and have the option to reset the rate for another 90 days if you don’t find a home in the initial 90-day period. No need to try and predict the market with this great program securing your mortgage savings.
Millennials Are Making an Impact
Millennials (anyone born between 1980 and 1998) will make up about 50% of home buyers in 2020 (up from 37% in 2019***).
- Suburbs will be a hot spot for this demographic to search for homes. In fact, 84% were willing to forego key amenities and home features in favor of their ideal location.
- Online real estate listings will become more important as 98% of this tech-savvy generation use the internet to search for a home to buy.****
What All of This Means
Take note of what’s going on in the housing market on a national level, but more importantly watch home prices in your local area to see if prices are moving higher or lower depending on demand or inventory levels.
If you’re looking for a home in the next 90 days, it’s smart to become a Churchill Certified Home Buyer and get Rate Secured so you stand out from your competition. This allows you extra time to look for the right home without worrying about interest rates or your monthly payment rising.
Remember to keep in contact with a Churchill Home Loan Specialist in your area so you can stay informed with interest rate movements and have a guide to walk you through the mortgage process.