Housing Market Trends – What’s to Come in 2020?

Whether you’re buying, selling, or staying put, here are the housing market trends you can expect in 2020.

Home prices are STILL on the rise.

Last year median home prices set an all-time high reaching $316,000. Home prices have been rising over the past few years. In 2018, home prices grew at a rate of about 5%. Last year, prices continued to rise but at a slightly slower rate of 3.3% (Freddie Mac). Real estate gurus predict this year will be no different. Home prices will continue to rise at a predicted rate of 2.8% in 2020. 

Some people are worried that the stability of the market is too good to be true and that a recession is on the horizon. Although economists are predicting that a recession will take place sometime soon, this likely won’t be the year for it. According to Zillow’s July 2019 survey of more than 100 real estate and economic experts, a recession is not expected until 2021 or later.

Rising home prices and the strength of the current market brings good news for sellers. Sellers are likely to make a profit if they sell while the market is good. However, some buyers might be priced out of the market, looking for something smaller, or postponing their plans to move. Fewer buyers could mean fewer offers on a home, so sellers need to make every showing count. Find a way to stand out and keep an eye on housing market trends.

Mortgage interest rates have dropped.

Those of you who purchased a home or refinanced in 2019 know that mortgage interest rate dropped significantly last year. In 2019, mortgage interest rates dropped below 4% for common types of loans, and experts predict that interest rates will land at 3.7% for a 30-year mortgage and 3.2% for a 15-year mortgage in 2020 (Kiplinger)

This is great news for buyers! Although higher home prices might cause buyers to hesitate before making a purchase, low mortgage interest rates present an opportunity to save money in the long run! This incentive will send the housing market trends in the same direction in 2020.

Less inventory is a possibility.

Because the market has been strong these past few years, many people have made their move and are happy to stay put for a bit. Many homeowners have locked in low mortgage rates and are now working to build equity in their homes. Measuring 54 metro areas, national real estate brokerage ReMax reports that the inventory for homes for sale was 9% lower in October of 2019 than it was in October of 2018. 

Since millennials are the largest generational group buying homes at the moment, this trend may be unreliable. Millennials (and younger generations in general) tend to move more often than older generations. A new study from Porch found that, out of the 1,000 people surveyed, Millennials typically move once every two years. If this is the case, a number of homes will return to the housing market very soon.

The majority of home buyers will continue to be Millennials.

In 2019, Millennials made up 37% of home buyers – the largest generational group. 25-39 year olds will continue to be the largest group this year with the addition of a small number of Gen Zers. Therefore, the market will continue to adapt to the needs and preferences of the younger buyer. According to the National Association of REALTORS® Research Group, 98% of Millennials used the internet for their home search and more than 80% of them found their home on a mobile device in 2019. Millennials are internet savvy and do their research, so real estate websites will continue to adapt to ever-changing modern housing market trends. 

Selling to Millennials is different than selling to older generations. These groups are impressed by different things. Although the size of a home is important, it’s not the number one selling point. Millennials are looking for that prime location, a great neighborhood, and a home with character.

Here are some of the top home features Millennials are looking for:

• Laundry room – 86%
• Patio – 81%
• Garage storage – 80%
• Walk-in pantry – 79%

If you’re considering some renovations, think about adding these to your list in order to broaden your home’s appeal.

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