Hello Valued Reader, welcome to Housing Market Daily.
Get ready for an exciting year in the U.S. housing market! Thanks to the Fed's rate decreases, mortgages are staying at or near all-time lows, making borrowing more affordable than ever. This is great news for those looking to refinance or buy a new home.
With some stability on the horizon for 2020, let's dive into what you can expect.
Low Mortgage Rates are Here to Stay!
Mortgage rates have been historically low and are predicted to remain so throughout 2020. The Fed's rate cuts in late 2019 have pushed these rates even lower, which is fantastic for consumers. Lower rates encourage homeowners to tap into their home equity for renovations or purchases, but it also means fewer homes on the market.
For buyers, these attractive rates (around 3.5% to 4% for a 30-year fixed) mean continued activity. Keeping an eye on local supply and demand will be key to understanding home values and projections in your area. The Fed's decisions will continue to guide mortgage rates, and for 2020, they look set to stay at current or even lower levels.
Increased Competition in Major Metro Markets
Prepare for a competitive home-buying market in 2020! Home prices are flattening, with a modest nationwide increase of about 0.8% expected. This could lead some homeowners to hold off on selling. However, millennials are entering the market in full force, and with a potential lack of inventory, we could see bidding wars and premiums on homes in certain markets.
While competition is healthy, a low supply of homes could deter some buyers. It's crucial to be cautious, research comparable homes, and avoid overpaying, as a market contraction could lead to a loss in home value.
Location, Location, Location! (And Hipsterbia!)
The final trend to watch involves millennial home buyers. While they make up a significant portion of the market, many are looking to move outside major cities for more affordable living arrangements. This trend, affectionately coined "hipsterbia," means suburbs outside major cities (like Chicago) will continue to attract home buyers.
According to The Denver Post, millennials represent 23.7% of Colorado’s population, highlighting their influence on the market. With suburbs becoming a prime target, expect prices in these areas to become more competitive, depending on the specific location. (Keep in mind, this forecast might not apply to smaller metro areas lacking job opportunities or lifestyle amenities.)
Other Key Takeaways for 2020:
Digitized Lending: The push for a fully digitized lending process continues, driven by tech-savvy millennial shoppers. This can significantly speed up the often lengthy home-buying process, potentially motivating those who are put off by paperwork.
Election Year Impact: With an election year upon us, the overall economy and market might see a period of quiet as candidates campaign. A negative economic turn before November's vote could impact the incumbent President.
In summary, 2020 is shaping up to be a dynamic year for housing. Low mortgage rates will continue to motivate buyers and refinancers, while increased competition and tightening supply are expected. And don't forget "hipsterbia" – the suburbs are where it's at for millennial home buyers!
Feel free to share this newsletter with anyone in your network who might find it helpful!
The Housing Market Team