Welcome to the Roarin' 20s! Hard to believe another year and decade are coming to a close, but as we tie up the little bow and move on from from 2019, let's take a moment to see what 2020 is looking to have in store for the real estate industry.
Throughout the last few years interest rates have been getting lower and lower. In 2020 it is expected that mortgage rates are likely to hover around 3.8%, a great low rate. This will energize the buyer's markets. However, because the housing market is still seeing a shortage problem and the housing tenure length is still rising; this will ramp up competition for buyers out there.
While the growth in competition will make for some frustration for the buyers the return of bidding wars will result in good outcomes for home sellers. The real estate website, Redfin, predicts that one in four offers will face a bidding war in 2020, up from one in ten in 2019.
As 2020 progresses the ramped up competition will encourage more homeowners and builders to sell homes, which will each the supply and demand relationship by the end of the year. As the supply and demand balance out the year will end with a likely national average of 3% price growth in the housing market.
Also, with the drop in rate the surge in home mortgage refinancing is likely to be a continued trend through 2020. Some forecasters are even predicting that rates could drop as low as 3.4% in 2020, which will really ramp up not just the housing market but also the mortgage refinancing market.
Millennials accounted for 46% of the home buying power in 2019 and their representation of the market will only continue to grow in 2020. The growing number of this generation who are eager to obtain homeownership are making a push towards the suburbs as home prices in the cities continues to increase. This wave to the city outskirts is changing the shape of suburbs, creating a new wave of "hipsturbia" communities, which are live-work-play neighborhoods. This is breathing new life into smaller towns.
With the growing share of the market being taken over by the younger generations the industry will see a further shift into digitization. In 2020 expect to see the various e-signature, digital mortgage application, income verification, and e-notary companies begin to partner up to streamline their service. This will shift the real estate and mortgage industries further into the digital world.
With all these prediction it is no doubt that 2020 will be a thrilling year in the real estate industry!