Predictions for Real Estate in U.S. in 2020
Housing and real estate experts are ready with their 2020 market predictions, and they’re worth a look – especially if you’re desire is to buy a new home next year – or looking to sell one. Here are some U.S. real estate predictions for 2020:
Home Sellers Will Sit 2020 Out
Realtor.com says that residential property inventory will “evaporate” in 2020. “That will make it more challenging for buyers to find a home despite attractive interest rates,” the Santa Clara, Cal.-based company states.
Millennials Will Get Aggressive About Buying Homes
Realtor.com also notes that one demographic will be big buyers in 2020 – even if inventories are low. That’s the millennials. Apparently, young age buyers are eschewing inner-city living and have their sights fixed on 1,800 square-foot homes in the suburbs, with good schools and decent neighborhoods. The company predicts millennials will take more mortgages than baby boomers and gen-x’ers in 2020. Down payments from millennial buyers will also likely be bigger than ever.
Home Prices Will “Flatten.”
They also predict that U.S. home prices will reduce, increasing just 0.8% nationwide. Prices will decline in more than 25% of the 100 largest metros, including Chicago, Dallas, Las Vegas, Miami, and San Francisco, according to Realtor.com.
The Housing Market Will Be “More Competitive.”
“Low mortgage rates started to revitalize the market at the end of this summer, but we won’t see their full impact on demand for housing until next year,” says Redfin chief economist Daryl Fairweather. “In 2020, buyers will have fewer homes to choose from than they have in five years. But the return of bidding wars is good news for sellers who may have been holding out this year as the market stabilized. The competition and faster price growth will tempt more homeowners and builders to list homes, which will help improve the balance between supply and demand by the end of the year.”
Go South, Young Buyer
Redfin also said that southeastern U.S. states will rule the settlement on the home price appreciation price. “Charleston and Charlotte will lead the nation in home-price growth as more people and employers move to affordable Southeast cities,” the company states.
Expect “Bidding Wars”
Thanks to low mortgage rates and low residential housing inventories, sellers can expect bidding wars in 2020, Redfin reports. “Low mortgage rates will continue to strengthen homebuying demand, but due to a lack of new homes for sale and homeowners staying put longer, there will be fewer homes on the market in 2020 than in the past five years,” the company predicts. “More demand and less supply mean bidding wars will rebound in the first quarter.”
Altogether, Redfin expects about one in four offers to face bidding wars in 2020 compared to only one in 10 in 2019. “This increase in competition will push year-over-year price growth up to 6% in the first half of the year, considerably stronger than the 2% growth seen in the first half of 2019,” the company states. “Supply and demand will become more balanced later in the year as more listings of new and existing homes hit the market and price growth will moderate to 3%.”
Mortgage Rates Stabilized at the Low End of the Range
Expect 30-year fixed mortgage rates to remain low, hovering around 3.8%, Redfin predicts. “Faced with slowing economic growth, the Federal Reserve will keep interest rates low,” Redfin reports. “Although the housing market is strong, weakness in other sectors, like manufacturing, is pulling down on the economy.”
The company does see some flexibility on rates, dependent on the U.S. economy in 2020. Because investors are already refreshing for the possibility of a recession, Redfin does not expect mortgage rates to fall much lower than 3.5% in 2020 even if the economy weakens. If the economy strengthens, Redfin expects mortgage rates to stay below 4.1%.