Monthly Archives: February 2020

Rent Control and Other Real Estate Trends To Watch Out Fors... Are You In One?

Rent Control and Other Real Estate Trends To Watch Out For

Staying on top of current trends is an important part of successful real estate selling. What will buyers, sellers, investors and construction firms be doing in the new year? Experts offer these predictions on real estate trends to keep an eye on in 2020.

1. Mortgage rates continue to drop.

At the close of 2019, the interest rate for a 30-year fixed-rate mortgage was at an average of 3.99%, making it a good year for first-time buyers and refinancers. With trade wars going strong and global economic growth stagnating, there’s a good chance the Fed will cut interest rates at least twice. As of mid-January, average rates were already at 3.79%.

2. Rent control spreads to more areas.

As many people struggle to find affordable housing, several states are turning to rent control. Oregon, California and New York all passed rent control bills in 2019. Other high-cost housing states such as Illinois and Washington are on a “watch list,” while rent control has become a talking point for a number of Democratic presidential candidates.

Rent control has already caused multifamily housing investors in affected markets to rethink and even reduce their investments, an issue that’s likely to occur in other states as they enact legislation.

3. Builders remain focused on starter homes.

Post-recession, builders turned their efforts to the more profitable segment of custom homes for well-to-do buyers. As a result, demand by first-time home buyers has remained strong, but the inventory of starter homes has dried up.

Builders specializing in entry-level properties saw double-digit percentage increase in sales last year, a trend likely to continue as supply tries to catch up with demand.

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Experts Predict a Strong Job Market and Low Mortgage Rates Will Fuel 2020’s Housing Market

Heading into 2020, a strong job market and low mortgage rates should bode well for the housing market. But thanks to a shortage of inventory and new listings, the positive real estate trends may turn out to be a mixed blessing.

Golden Age of Home Buying?

Unemployment and interest rates are both at their lowest levels in years. While widespread economic uncertainty in 2019 seemed likely to push mortgage rates north of 5 percent, rates actually declined to an average below 4 percent. In contrast, at the turn of the millennium mortgage rates were averaging 8.5 percent.

The National Association of Realtors Makes Their Predictions

According to the National Association of Realtors, mortgage rates are expected to remain low during the year. NAR chief economist Lawrence Yun says 30-year fixed mortgages will stay below 4 percent and finish the year around 3.8 percent.

Increases in new-home sales are projected to hit a 13-year high of 11 percent, but supply of existing homes will continue to be tight, resulting in a more modest 4 percent increase. Yun calls this a “healthy development for potential home buyers,” as prices will remain relatively affordable.

Despite the optimistic outlook, Yun does offer a word of caution. Increases in economic activity and inflation may trigger a corresponding rise in interest rates.

Real Estate Experts Weigh In

Other experts tend to agree with NAR’s outlook. Realtor.com and Redfin both anticipate tight inventory in the face of strong demand. As a result, the biggest challenge facing buyers will be finding homes, not affordability. In terms of mortgage rates, Bankrate.com chief financial analyst Greg McBride also sees them holding steady at or slightly below 4 percent.

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