This past year has been pretty good to both home buyers and home sellers—prices climbed initially, then leveled off, while interest rates plummeted. Plus, national unemployment is low, jobs are in abundance, and the economy as a whole is doing well. All in all, 2019 was a good year for real estate investors. But what about next year?
Here are some 2020 market predictions… and how they’ll affect your home value.
What’s in Store for 2020?
Currently, we’re experiencing a nationwide seller’s market—that is, there are more buyers searching for homes than there are homes for sale. It’s great news for sellers… but will it continue? Here’s what the experts say:
Home prices will continue to grow
Home prices soared in 2018. This past year, they continued to climb, though at a much more gradual rate—rising 3.1% from the average of 2018. The National Association of Realtors predicts 2020 will see continued price growth, though the exact amount is still under debate.
Some, like Zillow, predict more gradual growth of only about 2.8%, while others, like data firm CoreLogic, predict numbers closer to 5.6%.
Mortgage rates will stay low
Towards the end of 2018, mortgage rates were on the rise. And then, to the surprise of most experts and analysts, they fell—nearly 1% lower than they had been. The good news for both buyers and sellers is that interest rates are expected to say low into the new year.
Forecasts from Freddie Mac and the Mortgage Bankers Association suggest average interest rates will sit somewhere between 3.5% and 3.9%.
Inventory will stay low
Inventory—that is, the number of homes currently for sale—has been low for a few years now. Favorable buying conditions like low interest rates, low unemployment, and high wages, have led to an uptick in interested and active home buyers. At the same time, the amount of time the average homeowner stays in their home, according to data from Redfin, has increased.
In short, fewer sellers are selling while more buyers are looking—leading to fewer homes on the market and overall fewer home sales. This trend is expected to continue into 2020.
Millennials will continue to be on the hunt while Boomers stay put
In recent years, millennials—those born somewhere between the early 1980s and the late 1990s—recently started playing the home-buying game, and since then they’ve grown to encompass the largest portion of the home buying market, making up 46% of all mortgage originations last September, according to Realtor.com.
However, all this millennial activity could be dissuaded by older generations, particularly aging baby boomers, who increasingly choose to remain in the same homes, rather than sell and relocate, keeping homes off the market.
Millennials will drive the market
Making up nearly half the buying market, millennials will drive the real estate market and its trends—the hot neighborhoods, the in-demand home features, and even where and how business is done.
One of these hot demands has been nicknamed “Hipsturbia”—live-work-play suburban communities with the convenience and transportation of a big city and the affordability of a suburb. In fact, Urban Land Institute names “Hipsturbia” as one of the top real estate trends of 2020.
Real estate will continue online
Another millennial-driven trend to be on the lookout for? Increased digitization of real estate. In other words, buying and selling being done online. If you’re selling, that means paying special attention to things like high-quality listing photos, expanding listing posts beyond the MLS, and using social media to promote listings. (Or finding an agent who can do that all for you!)
Your home value will change!
One of the most important things to keep in mind is that the real estate market is constantly in flux… and no one can predict with perfect accuracy where it’s going or what it’ll look like even just a few months in advance. The best way to make decisions about your real estate investment is to work closely with an expert.
Curious to know what your Portsmouth, NH or Seacoast home value will look like in the new year? Ask Jim & Ann! We’ve been doing business in the Seacoast area for decades, so no one understands the trends and fluctuations of the market like we do, and we’d love to help you list your home!