As we finish 2019 and start 2020, there are always many questions about what the coming year will bring. The real estate market is no different. Will 2020 bring appreciation or deprecation of home prices, fluctuation in mortgage interest rates, increase or decrease in building and what is expected regarding the amount of activity in the housing market? It’s impossible to know for sure but here are some predictions for 2020.
Freddie Mac’s latest forecasts predicts that mortgage rates should remain at ultra-low levels in 2020 and even 2021, hovering around 3.8%. 2019 saw significant mortgage refinancing with rates so low. The number of homes sold in 2019 is expected to reach around 6 million with slight increases each year through 2021. Home pricing won’t drop but the appreciation rate is expected to slow with current annual growth finishing 2019 around 3.2% and dropping slightly to 2.9% in 2020 and 2.1% in 2021.
Redfin’s latest forecast expects the first half of 2020 to see an increase in homes that receive competing offers due to increased demand brought on by low interest rates and rising tenure. This will bring increased prices, which will lure other sellers to the market and help the market inventory levels balance out towards the end of 2020.
Overall expectations trend positive but there are several sources including Zillow that predict 2020 will bring the start of the next recession. Recessions are cyclical and are impacted by many factors in the economy, but housing can play a key role in the determination of a recession. The next recession isn’t likely to see housing at the center like the last one, but an overall weakened economy will impact the housing market as well if employment, spending and interest rates see changes.
Lawrence Yun, Chief Economist with the National Association of REALTORS® predicts prices will appreciate between 3 and 5% in 2020. Builders continue to start more homes but are still unable to keep up with current demand. This will be felt stronger in low to mid-priced homes as millennials are currently approaching 50% of the current market activity.
Predictions are always uncertain and never exactly right due to many variables but overall expectations for 2020 anticipate mostly positive news coming out of the real estate market. If you are ready to talk about applying a strategy to your long-term real estate goals, contact me today so we can determine how to make the most of the current real estate market for you. I will be happy to answer any questions you may have, help you to find your dream home or determine the value of your existing property.