The year 2019 was quite a ride for the U.S. Housing Market. We saw a record high for median home prices, as it went up to $316,000. But what’s on everyone’s mind is whether we’ll be seeing more of the same trends in the Housing Market this 2020, or should we expect new ones to emerge?
Well, skip your financial advisor and read on, because we’ve got you covered, and whether you’re selling or buying property this coming 2020, here are a few trends for the new year that we see in our crystal ball.
TREND 1: HOME PRICES WILL STILL RISE
The rise in home prices last year certainly didn’t reach 2018 levels. Indeed, while 2019 saw a 3.3% rise in home prices, 2018 saw a 5% rise. Real estate gurus predicted that we’d be seeing the same trend this 2020; that is to say, home prices, to some degree, will still rise, but they’ll grow slower than they did during the previous years. Recent estimates put the rise in home prices this 2020 at around 2.8%.
RISING HOME PRICES: WHAT IT MEANS FOR BUYERS AND SELLERS?
Well, for one, it means you could make a nice profit. But on the downside, the rising home prices can also mean that a lot of buyers will be skipping buying a home this year, which might lead to fewer offers for your abode. One way to mitigate this is to make your house stand out. So, make sure your home is more than just presentable to lawyers and prospective clients. Also, get an excellent real estate agent who can help you prepare your home and get those offers.
If you’re a buyer, it means that you need to weigh your priorities this year and ask yourself whether owning a home is on the top of your list. You might want to do some number-crunching, too, and research on the various payment plans on offer that will fit your budget. Remember, any mistake you make could financially screw you for years to come, so don’t rush to do anything if it makes little financial sense.
Here’s some advice: investment planning is critical; if you can’t afford 10% on a 15-year fixed-rate conventional loan, then maybe a house isn’t what you need at the moment. Anything less than that, and you might end up strangling your budget with substantial monthly mortgage payments.
TREND 2: MORTGAGE INTEREST RATES WILL CONTINUE TO DECLINE (FOR NOW)
They’ve been declining 2019, going under 4% for common types of home loans. For 2020, experts predict that it will go even lower and will stay around 3.7% to 3.2% for a 30-year mortgage and a 15-year mortgage, respectively.
But, remember, things could change; tariffs and trade wars might affect the economy and render those predictions effete.
LOWER RATES: WHAT IT MEANS FOR BUYERS AND SELLERS
It goes without saying that if rates remain low, then buyers will have more reason to buy. If interest rates start climbing later in the year, then buyers will be less motivated to do so.
If you’re a buyer, be smart and opt for a 15-year fixed-rate mortgage. This way, you’ll have a good idea of what your payments will be throughout the life of the home loan.
TREND 3: MOST BUYERS WILL STILL BE MILLENNIALS
At a whopping 37%, millennials were the largest group of buyers last 2019. Unsurprisingly, they are still expected to be the largest group of buyers this 2020.
MILLENNIAL BUYERS: WHAT IT MEANS FOR BUYERS AND SELLERS?
So, if you’re a seller, then you need to learn how to reach millennial eyeballs. One effective way to do that is through the internet. Millennials, after all, are internet-savvy, and they do all their research (including home research) on the internet. So make sure your listing is HGTV-ready. Also, provide quality photos and digital tours if possible.
If you’re a buyer, you need to make sure a home is high on your list of priorities. Many young people get into financial ruin by acquiring mortgages that they haven’t thought through. Don’t make the same mistake. Consult an expert if you must—make sure you’re ready before you wade into the home market.