Image by Gerd Altmann from Pixabay
So what will 2020 bring to the real estate market? While market trends can, and do, change on a whim, some activity seems to be easier to predict. If you’re entering the market this year as a buyer or seller, having a better understanding of these trends will help you make informed decisions, so here’s what you can expect.
1. Home Prices Rise, but Slower
Home prices have been on the rise in the past couple of years. This trend is expected to continue in 2020, but the rise will be a bit slower. Freddie Mac warns of an economic slowdown this year, and expects price growth to be around 2.8, compared to 3.3 in 2019 and 5.0 in 2018. This is good news for sellers, but it’s also good news for those who aren't considering selling this year. Rising home prices means your equity will increase or hold steady.
2. Drop in Mortgage Rates
Next, interest rates are expected to drop for most loan types. In 2020, expect to see averages below four percent for most types of loans. Of course, this particular trend can change suddenly, but if it remains on track it will mean more interested buyers in the market. This can help sellers.
3. Homebuilders Focusing on Starter Homes
Demand for starter homes is on the increase. There are two reasons for this. First, many people who would normally be listing their starter homes are choosing to stay put, because younger homeowners are valuing community more than owning a large home. Second, Baby Boomers are starting to look for smaller “starter” homes as their downsized homes. This creates an additional number of buyers competing for the type of home that appeals to first-time buyers. Because of this demand, many homebuilders are focusing on building in this demographic.
4. Millennials Dominating the Market
Millennials, those born between 1980 and 1998, are going to be the largest generational group in the home buying market. Many of these young adults waited to buy their first home until they were well established in their careers, and are now ready to make the purchase. Others are ready to move out of their starter home and into their forever home. These buyers use the Internet primarily to help them in their home search and are looking for the home’s location and features, rather than a huge home with lots of square footage.
Market trends are never set in stone. Economic factors can change and impact these trends, but based on current projections, these are a good indication of what the 2020 home market will bring.
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