7 Housing Market Trends for 2020
A new year is almost upon us, which means that it’s time to reflect on the last year and prepare for what’s coming. With all the chatter there is out there within the real estate industry, it’s hard to know what’s fact and what’s fiction. 2019 saw many ups and downs, and 2020 is expected to keep real estate agents on their toes. While it’s up to you to stay on top of the news and trends, especially in your area, it’s helpful to have an idea of what to expect.
Here are the top 7 housing market trends for 2020!
1. Millennials Continue to Impact Housing Demand
In 2020, the future of the housing market is expected to lie in the hands of millenials. Though we have learned that people born between 1981 and 1997 are buying homes later in life, that time is now. Many millennials are “coming of age” in 2020.
According to Mansion Global, 4.8 million millennials will be turning 30 next year, and the oldest of this demographic is 39. Some will buy their first homes, and some will move into the suburbs, which is still a common trend despite societal shifts. Because of historically low interest rates and high rent prices – and, the availability of information of what to expect when buying a home at your fingertips – more and more millenials will be opting for a housing investment. And, you’ll want to be there when they do.
2. Boomers are Keeping Their Homes
Boomers have been blamed extensively for the state of the economy that millennials now live in, and this massive population still has a large impact on the housing market today. In 2020, it’s expected that more boomers are choosing to live in their homes until the economic outlook and the housing market seem to be more promising, according to Housing Wire.
Boomers are not able to see any monetary incentive to sell their homes right now, as many have seen their homes have not gone up in value to the extent they would have predicted. Because of this, inventory will be at an all-time low – with sales of existing homes dropping 1.8% to 5.23 million – which will make it difficult for all those millennial buyers looking to settle down. Real estate agents should keep this in mind when meeting with clients who want to look at a wide array of homes.
3. People are Moving Elsewhere
As more people are seeing the benefits of moving to smaller, less-expensive cities, we’ll be seeing an increase in young people moving to and buying their first homes in Arizona, Nevada, Texas, Georgia, Florida, and the Carolinas, says Housing Wire.
Affordability will be one of the main aspects that people are looking for when purchasing their first home, and because of this, there will be a mass migration out of bigger cities like New York, L.A., and San Francisco, according to Realtor.com. This, of course, can inevitably lead to the decline of prices in those major cities, while increasing the supply of homes in them.
4. Mortgage Rates are Gradually Increasing
Despite the fact that one of the reasons people will be buying at a higher rate in 2020 is due to the consistently low mortgage rates, one thing we do plan to see next year is actually an increase in mortgage rates overall. (Honestly, thalse, Realtor.com predicts that rates will go up to 3.88%. Sharing this information with prospective clients can urge them to buy a home now before these rates continue to increase.
5. Slow-Down in Luxury Housing Market
Although the supply of homes in the “regular” market will decrease, inventory of homes in the luxury market are predicted to increase in 2020, according to Mansion Global. As luxury homes are defined as the top 5% in a given market, increase in inventory dilutes the value of those homes to some extent. This is pushing sellers of these homes to list now while their homes are still worth something, and in some cases, they will even drop their prices to stay ahead of the competition.
6. Rental Properties Dominate
Yes, 2020 will see more people looking to buy homes instead of renting. But, because the low inventory of homes and the rise of housing prices will force some people to wait it out, renting will become a more desirable option. And, those with rental properties who want to keep their homes occupied, will offer incentives for renting that would-be buyers will find hard to turn down, according to CNBC.
Therefore, as a real estate agent, be open to working with clients who may opt to rent instead of buying right now, because you can always work with them again in the future when the time comes. Make connections now, and perhaps focus on grabbing listings that no one wants because investors will be looking to those to turn into rental properties.
7. The Economy is Still Unpredictable
All in all, although we may have some idea of what to expect next year, the fact of the matter is that many of these trends are just predictions (though, they are supported by statistics). With 2020 being a presidential election year, the political climate certainly has the power to influence the housing market, and it has already to some degree. The best thing you can do as a real estate agent, then, is to follow these trends and always try to be one step ahead.