Do you want to buy a new home in 2020? Check out these housing market predictions that will help you plan to buy a house you love at a price you can afford!
1. Low mortgage rates
Experts predict interest rates will continue to help homebuyers. Freddie Mac, the government-sponsored entity, predicts the average 30-year fixed-rate mortgage will be 3.8% in 2020. Freddie Mac's "older sister", Fannie Mae, projects even lower rates: 3.6% for most of the year and 3.5% in the fourth quarter. The average of mortgage rate predictions from six top agencies is 3.7%. With rates staying affordable, homebuyers will have more money to spend on houses.
2. Shortage of homes for sale
Home inventory will stay low in the new year. One reason for the shortage is homeowners are keeping their houses longer. The average homeowner now remains in their home for 13 years – up five years since 2010. Plenty of Millennials are predicted to shop for available homes. Millennials are expected to be make up more than half of all homebuyers in 2020.
3. A modest increase in new construction
New home construction will increase but not keep up with demand. The National Association of Realtors (NAR) expects the number of new housing starts to increase by 57,000 compared to 2019. NAR believes 600,000 more new units are still needed, however, to keep up with new households forming and to replace older homes that have become obsolete.
4. Home prices on the rise?
CoreLogic's Home Price Index (HPI) anticipates that home prices could jump 5.6% by September because of low inventory and high demand. Danielle Hale, chief economist at realtor.com, believes that prices nationwide will rise by less than 1%; however, she agrees housing inventory will stay tight. Housing prices vary by community and local trends are often different than national averages.
5. Hipsturbia—it's a thing!
As metropolitan areas become more expensive, younger homebuyers are looking to the suburbs. That's how we get Hipsturbias – live-work-play communities that combine a thriving urban culture with safety, affordability, walkability, and good public transportation. Hipsturbias are often found around cities like New York, Chicago, San Francisco, Atlanta, and Tempe.
Keep in mind these trends are projections and factors like economic growth, unemployment, interest rates, mortgage availability and consumer confidence can all affect the real estate market. If it's been a while since you bought your current house, check out our handy homebuying tips.