Not only is it a New Year – but we’re also heading into a new decade! That can bring lots of change, especially if you’re buying a selling a home in 2020. Here is what I believe as well as what other experts have to say about what to expect in the coming year.
Home prices continue to slowly rise
2019 was an incredible year for the housing market. In fact, median home prices hit a record high of $316,000. However, be aware that even though prices increased, those increases were slower than in 2018. Experts are predicting more of the same for 2020. Many agree that home prices will rise by 2.8 percent in 2020. If you’re selling, then that can mean that you may make a tidy profit on your home – though there may be fewer buyers. Some buyers may be getting priced out of the market as prices continue to rise.
There will be a shortage of inventory
In the first half of 2019, there was a build-up of inventory around the U.S. The number of available homes for sale increased quickly. But when mortgage rates decreased in the spring, inventory started to shrink. This trend will continue into 2020. Even though there are improvements with new construction, the coming year will see a lack of growth in available inventory. In fact, some experts think we may hit a historic low.
Mortgage rates will continue to decline
In 2019, mortgage rates dropped below four percent for many types of common loans. Many experts think that mortgage interest rates will hover around 3.7 percent for 30-year loans and 3.2 percent for 15-year loans. However, changes in tariffs and looming trade wars can affect this, should they occur in 2020. In which case, the Federal Reserve could decide to increase mortgage interest rates. Lower rates can be great for sellers, but be aware that if they rise, your home may stay on the market longer.
Millennials will still dominate the market
In 2019, Millennials represented 37 percent of homebuyers. Experts predict that they will continue to be the largest segment of buyers. What does that mean for home sellers? For starters, your online listing needs to stand out. Millennials are the Internet generation, and most will begin their home searches online. Be sure to use high-quality photos and consider using video tours as well. These buyers are also looking for smart home innovations as well as eco-friendly amenities. If you’re selling, then be sure to keep in mind what the largest pool of buyers may be looking for in a home.
Buyers seeking affordability
Although one of the trends of the last decade has been for younger people to live in urban cores, that trend is beginning to change. Younger buyers are trading the convenience of downtown living and moving outside the urban core. This is being largely driven by affordability. Large cities like New York, Los Angeles and San Francisco are seeing buyers moving to mid-sized cities where real estate is more affordable.