Goodbye 2019. Hello 2020! Take a look at real estate trends for 2020.
Are you considering purchasing a new home in 2020? Or an investment property?
This year projects to continue the historical low inventory and rates. Whether you are an investor or home buyer, here are real estate forecasts for 2020:
Millennial’s Finally Are Buying
Remember the complaints and jokes about Millennial’s? They do not buy. Only rent. They live in their parent’s basement.
Well those Millennial’s are now buying their first home!
According to realtor.com 2020 forecast, Millennial’s will take more than half of all mortgages in 2020. The first time this generation will be more than half of the mortgages. Step aside Gen X, there is a new generation in Mortgage Town!
Although this generation is skipping the traditional ‘beginner home’. Instead, Millennial’s are purchasing their long-term home. Millennial’s are starting their families later in life. They are also further into their careers.
There are 4.8 million Millennial’s hitting the home buying age. This has created a demand problem.
Interested in buying this year, check out BankRate.com article about How To Buy A House in 2020.
The first half of 2019 appeared to indicate a decline in home sales. This carried on from 2018.
Then interest rates slashed. The second half of 2019 did a reverse-face and increased home sales. According to NAHB, 2019 ended with a confidence level of 76, the highest since 1999.
“Real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting,” said George Ratiu, senior economist at Realtor.com. “Accordingly, 2020 will prove to be the most challenging year for buyers, not because of what they can afford but rather what they can find.”
In 2020, inventory is declining and home prices are rising. Not helping is the shortage of labor in residential construction. The construction workforce lost 1.5 million workers during the Great Recession. They have yet to replace those lost workers.
With inventory at a historical low, home searches will take longer. Also, expect more bidding wars on home sales.
Mortgage Rates Decline
In 2019, there were several drops in interest rates. Rates dropped below 4% for common types of loans.
Although rates continue to be historically low, rates in 2020 may drop a little more. The all-time low was 3.3% in 2012. In December 2019, rates are 3.99%.
Expect rates to remain relatively the same for 2020. Although Federal Reserve has room to lower interest rates more. The US economy continues to be strong in unemployment, wage growth and GDP growth.
Rent Control Trend Continuing
2019 was a big year for rent control. Expect that trend to continue in 2020.
In February, Oregon passed a rent control. Capped rent hikes at 7% annually. Later, New York followed suit with a 7.5% cap and California a 5% cap.
With an important election in 2020, expect rent control and housing regulations to be a common topic. Especially for Democratic candidates. Housing economists acknowledge building more housing is a better solution than rent control. However, labor shortage in construction makes building houses a challenge.
In 2020, rent control will continue to be a trend. Especially in large metro markets. Illinois and Washington are on the ‘watch list’ for rent control.
Real Estate Trends in 2020 Recap
An important year for America with the presidential election. Real estate had a boost in 2019 for buyers and that will continue into 2020. The economy is in a strong position.
For investors, 2020 will be difficult to find deals and face the uncertainty with rent control in major markets. However, this is a good time to capitalize on low rates.
For buyers, 2020 will continue to be hard to buy a home. Expect your home search to take longer. There will be more bid wars too.
Lastly Millennial’s, welcome to the home buying stage of your life!
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