2020 not only brings a new year but a new decade. There’s, of course, no way to know exactly what the next decade will bring, but real estate experts have made their predictions for what the housing market could look like in this next year –
Here’s a great blog post from one of our preferred closing attorney’s Perrie & Associates, LLC about real estate trends moving into this next decade.
Mortgage rates are expected to stay at their low rate for most of 2020, according to Forbes and data from Freddie Mac. Current rates are at 3.75% and are expected to remain between 3.7% and 3.9%. Realtor.com’s 2020 Housing Report supports this, predicting that the year will end with rates at 3.88%. Ben Lane with HousingWire says this rate will make 2020 a popular year for refinancing. In 2019, reports showed that it was the best year for refis since 2016, and Freddie Mac experts are predicting $834 billion in refinance originations in 2020. The low rates will benefit home buyers as well, with Freddie Mac predicting $1.299 trillion in purchase originations to start the new decade. Sean Hundtofte, with chief economist with lender Better.com, told Forbes this will allow homebuyers to “be able to afford more house than they would have otherwise.”
According to the chief economist at Realtor.com Danielle Hale, the price will be the major selling point for 2020. “Many people would prefer to live in the San Francisco’s and other big cities, but for the right price they will make the decision to go to another city,” she said. Forbes says home prices are expected to rise because of inventory shortages and high demand. Experts are predicting prices to rise 5.6% by September of 2020, and the lower-end of price ranges will be hit hardest due to a lack of new starter homes. Ralph DeFranco, chief economist for Archer AMI told Forbes, “low-interest rates and a shortage of starter homes will continue to push up prices. 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.”
A large portion of millennials will be turning 30 in 2020 – the prime age to buy a first home, according to Realtor.com, and the oldest millennial will be turning only 39. Therefore, this generation will dominate the market. According to Hale, millennials will hold more than 50% of mortgages by mid-2020, and despite the belief that the generation doesn’t want to settle down, many are at the age where they have started having families and are ready to establish roots. However, these potential buyers will face many difficulties, as older generations are choosing to remain in place, keeping many homes off the market. This is pushing millennials to “Hipsturbia,” according to Forbes. These young homebuyers are looking to suburban markets outside of major cities that offer live-work-play neighborhoods and walkability to many amenities.
While it’s important to look at market predictions across a national level, Caroline Feeney with Forbes reminds agents to focus on the local picture. Geography, affordability, jobs, and others are all nuanced factors that play a role in a local market. George Ratiu, the chief economist for realtor.com, told Feeney that 2020 will bring a lot more “differentiation between various markets.” In Atlanta, forecasts show a split down the middle between the city and the surrounding metro area as millennials flock to “Hipsturbia.” This split will see lots of activity and growth in lower price points, and “softer price points driven by weaker demand and the affordability ceiling at the higher end.” According to Forbes, Atlanta is predicted to see home values in the bottom tier raising 10%, while raising just 2.1% in the top tier.
Again, you can never be certain of what the new year will bring – but we can be sure to see many changes in real estate in 2020 and the following decade. Be sure to keep your eyes on local markets and follow us here at www.TheMeridianWay.com and like our facebook page facebook.com/themeridianway/ as we share the latest news and trends! Here’s to a wonderful new year of growth!