Posts Tagged as 2020 Real Estate Trends

Millennials, Baby Boomers, and Market Shortage: What To Know About The Real Estate Landscape Today

Millennials and baby boomers are at opposite ends of the generational spectrum. How do their needs shape current real estate trends? Here’s a look at how the market is shaping up for 2020.

Inventory Shortage Continues

Last year’s drop in interest rates created a fierce demand that resulted in tightening available inventory. This year, as the largest group of millennials turns 30, many of them are expected to buy their first home. Add to that the fact that a number of baby boomers are choosing to stay in their current homes longer, and the housing market will continue to run short on inventory.

Tough Times for Landlords

Thanks to rent control measures enacted last year in New York and California, average investment in multi-family properties has already begun to decline. In addition, home prices continue to rise in traditional spots like NYC, Los Angeles and San Francisco as well as new hotspots in real estate trends such as Seattle, Portland and Nashville. As a result, it’s become extremely difficult to break into home ownership. 

Demand for Starter Homes Rises

As effects of the Great Recession continue to fade, millennials are in a better financial position to buy their first home and start a family. But they’re also competing with baby boomers, who are looking to downsize as their families leave the nest. Builders will take advantage by focusing on development of starter homes.

Home Price Growth Slows Down

Workers are migrating to major urban areas, which are experiencing the bulk of job growth. Rising real estate prices in those spots will be forced to slow down until wages reach a level that can once again support them. 

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Coronavirus Fears

Coronavirus Is Infecting The Real Estate Market: What You Should Know

Coronavirus, a deadly disease originating in China and spreading worldwide, has taken center stage in recent news. Can a health crisis have an effect on current real estate trends? Experts weigh in on how coronavirus may impact the U.S. housing market.

Putting the Brakes on the Luxury Real Estate Market?

At this point, there have only been 11 confirmed cases of coronavirus in the United States. But according to Lawrence Yun, chief economist for the National Association of Realtors® (NAR), the luxury real estate market is already taking a hit. Many high-end properties on both coasts are purchased by wealthy Chinese buyers, to the tune of $13.4 billion in NAR’s most recent annual report.

In the short term, this could repress an already sluggish luxury market, which is defined as properties selling for $1 million-plus. Bay Area broker Amy Kong, president-elect of the Asian Real Estate Association of America, reports lower attendance at open houses marketed toward Asian buyers.

Interest Rates on the Decline

China is the world’s second-largest economy, so anything impacting their financial outlook has a ripple effect around the globe. On January 30, rates for 30-year fixed-rate loans dropped nine basis points to 3.51% While lower rates could trigger an uptick in buyers, the benefit could be negated by sellers raising list prices.

What’s Ahead?

Yun makes a comparison between coronavirus and the outbreak of severe acute respiratory syndrome (SARS) in the early 2000s. SARS had a negligible effect on U.S. real estate, but Chinese buyers weren’t as active then. Fortunately, the consensus is that once the coronavirus is under control the market will bounce back to business as usual.

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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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Zillow's Thoughts for 2020

What Does Zillow Think Will Happen With the Housing Market in 2020?

While the subprime mortgage crisis triggered the Great Recession of 2008, the U.S. real estate market has largely recovered from that disaster, with some home prices actually appreciating above pre-collapse values. What real estate trends will be driving the market in 2020? According to online real estate company Zillow, it could be a mixed bag.

How Will the 2020 Economy Affect Real Estate Trends?

Over the last 10 years, the U.S. market has been riding the wave of unprecedented economic expansion. But when Zillow surveyed 100 real estate experts and economists about their predictions for 2020, almost half of them responded that a recession was likely, possibly starting as early as the first quarter.

Unlike the last recession, the housing market is not expected to be the catalyst. Concern this time is focused on monetary policy, specifically the Federal Reserve’s actions regarding interest rates. Higher interest rates would pump the brakes on rising home values, which would make houses more affordable, but raising rates too quickly could usher in an economic slowdown.

Outlook for 2020 Housing Market

In last year’s survey, geopolitical issues were the hot button topic expected to influence the economy. Now that monetary policy has surpassed those concerns, other points to watch include the trade war with China, a potential stock market correction and high inflation rates.

Terry Loebs, founder of Pulsenomics, the company that conducted the Zillow survey, expressed optimism about continued health of the housing market. According to Loebs, factors such as constrained supply, persistent demand and low unemployment will surpass rising interest rates when it comes to impact on real estate trends.

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