Published January 22, 2020

2020 Vision: What to Expect In Real Estate For the New Year

Staff Writer

Content Specialist at Effective Agents

We’re on the brink of a new year, which means a new focus on real estate. The United States real estate market is fast-moving, and there is a myriad of variables that play a role in where the trends go, but the following are some general things you might be able to expect in 2020.

Mortgage Rate Lows

With current mortgage rates hovering around 3.75%, the overall prediction from financial and real estate professionals is that they’ll continue to stay low. There’s a possibility they may go even lower in 2020, which could be good news for buyers and the real estate market as a whole. Fannie Mae is predicting rates somewhere between 3.5% and 3.6% for most of the year, while some are saying they might go a little higher but remain relatively low. Most don’t believe rates will go above 3.9%.

Rising Home Prices

While mortgage rates might dip a bit more in the coming year, home prices will likely continue to go up because of low inventory and high demand. According to CoreLogic, a property data firm, prices should go up 5.6% by next September. There aren’t a lot of listings on the market right now, and that’s creating a sense of competition for what is available. It could be that entry-level home prices rise faster than incomes next year, and with construction rates fairly stagnant, it could be a difficult market for lower-income buyers.

Generation Z Steps Onto the Scene

For years we’ve heard about the influence of Millennials, and while they are still an important part of the home buying market, Generation Z is likely going to make their presence more felt in the real estate industry in 2020. One TransUnion report showed that the number of Generation Z shoppers who got a mortgage more than doubled in a year. There was year-over-year growth of 112% for this age group as compared to 12% for millennials. Many of the general preferences of a Generation Z buyer are likely to be similar to those of Millennials—for example, small, affordable homes. There is another generational issue likely to play a role in the market in 2020—the Baby Boomers. Boomers are holding onto their homes for longer, as opposed to moving to retirement communities or downsizing and moving south. This staying-in-place trend is restricting housing inventory as well.

Recession Fears

Some indicators are pointing to the potential for a recession in 2020 or 2021. While this is certainly a possibility, the housing market won’t be the reason for this recession, unlike what happened with the Great Recession. There aren’t many experts predicting a housing crash, even if there is a recession. This could mean that trends in 2020 favor the investor or people with some cash on the sidelines who are waiting for an opportunity to find a good deal.

Suburban Popularity

Finally, another trend that may influence real estate in 2020 is the growing interest in returning to the suburbs. For years, Millennials were seen primarily as urban dwellers, but urban home prices are pushing many out of the cities as are other lifestyle factors, such as the fact that Millennials increasingly have school-aged children. A term has even been coined to describe younger generations’ moving back to the suburbs—Hipsturbia. Some of the things Millennials are looking for as they leave urban areas in favor of the suburbs include walkability and in-community amenities that often follow the live/work/play concept.

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