“In 2020, there will be opportunity for buyers, but in many ways the challenges they’ve faced for years are going to persist—challenges like difficulty finding the home that’s right for them, and competing with other buyers, especially in affordable price points,” says Danielle Hale, chief economist at realtor.com, whose team pulled together a forecast of housing trends for 2020.
In other words: The more things change, the more they’ll stay the same. A lack of homes for sale has been making things difficult for buyers since 2015, and next year, inventory could reach historic lows. And although single-family home construction is expected to increase 6%, it still won’t be enough to keep up with demand.
There is a bright side, though: Mortgage rates are expected to remain reasonable, at an average 3.85%.
Let’s take a closer look at the biggest factors that will shape the real estate market in 2020.
Affordability, affordability, affordability
OK, it’s not as catchy as “location, location, location,” but achievable price points will be key in the coming year, especially as millennial buyers solidify their position as America’s main home buyers (more on that later).
Now that we’ve apparently hit the ceiling of crazy price growth, it seems that buyers are just over overpaying.
“Many people would prefer to live in the San Franciscos and [other] big cities, but for the right price they will make the decision to go to another city,” says Hale.
Perhaps a city like, say, McAllen, TX, where sales are expected to rise 4.4% and home prices to appreciate 4% in 2020. Compare that with a 9.5% drop in sales for Las Vegas, and 1.1% decrease in home prices.
Texas, Arizona, and Nevada are expected to welcome an influx of home shoppers priced out of California. Meanwhile, would-be buyers from pricey Northeastern markets will likely head to the Midwest or Southeast. There, they can find affordable housing as well as solid, diversified economies.
Millennials mature into home buying
“The largest cohort of millennials will turn 30 in 2020—historically, that’s when people tend to think of buying their first home,” says Hale. The oldest millennials will be turning 39. By the middle of the year, she says, this generation will account for more than 50% of mortgages taken out in the country. Yes, that’s more than all other generations, combined.
Surprised? Well, the popular notion that millennials aren’t interested in…
By Cicely Wedgeworth | Realtor.com