Where does the real estate market stand for 2020?
This year big changes are expected in the real estate market. Some of these changes will be better for buyers while others will spark competition, possibly creating bidding wars, for the same properties. How will the recent strike on Iran affect the property market? We will look at what to expect in 2020 and trends the experts feel will emerge below.
Home Buying Rates
The airstrike in Iran is solidifying low rates in the housing market. Many investors are deciding to switch from real estate investment trusts, or REITs, and real estate investment groups to traditional stocks and bonds. After the assassination of one of Iran’s top military officials, investors worry about housing loans for military members that could be called into action and others who might move frequently.
Since Fannie Mae and Freddie Mac are predicting even lower mortgage rates at 3.65 and 3.625 percent, first-time buyers have the opportunity to cash in on a rate they can easily afford. The sooner the better, because Forbes predicts housing prices will go up as the year continues. The first half of 2020 could be the best time to apply for a new mortgage.
Who Is Buying Up New Homes
Realtors are getting better at working with younger generations. Millennials are the age group looking for houses to buy across the U.S. The problem is many baby boomers are living longer and holding onto lifelong properties. The younger generation is helping grandchildren get on their feet with large properties and homes big enough for two or three generations to live in comfortably. The younger age group wants to purchase a first or second home, but the availability is not there for their price range.
Growth in building new homes will not offer enough help to inventory rates fast enough say expert publications like Forbes. Another problem is that the new construction is mainly in the higher property brackets. Since millennials are seeking affordable housing options at entry prices, the new properties are not accessible for these groups. Realtor says the numbers for new construction are higher than last year at this time. However, the addition of new construction homes is not going to help the majority of the group looking for a house to buy.
With the construction home types and the number of people looking to buy homes, inventory levels for people seeking an entry-level property are shrinking. This is especially the case where large technology companies are building out new facilities. As an example, we have seen a tremendous uptic in the interest in condos for sale in Arlington because of Amazon’s new presence there has brought tremendous demand for housing.
Other growing tech hub cities such as Boston and New Orleans are attracting millennials too. We expect Boston’s real estate market to continue to drive out many affordable housing options.
With inventory expected to shrink in 2020, especially in the more affordable areas of the real estate market, it may become harder for first time homebuyers to get in, even with the more attractive mortgage options. This means a lot of unhappy people who will go through bidding wars only to find that someone else will get the property they love. Then, these groups will face going through the process all over again.
Some people may find they have to put in multiple offers, look for homes before they hit the market, or find a way to increase their budget to get into a home in the neighborhood they want. Another problem is the increase in minimum wage across the states. People can afford a house for the first time in many years, so there are more people looking for homes driving the available property numbers even lower.
Which area will interest buyers the most
Since many millennials are going to see dwindling inventory rates, these groups will look towards purchasing in the suburbs. These areas offer the best of both worlds. The suburbs have quick access to everything the city can provide while giving new buyers a friendly neighborhood atmosphere with room for the family to play at local parks, go for jogs on walking trails, and stay away from the smog in urban areas.
Real estate will see digital trends grow
Online mortgage applications are just the start of the newest trends 2020 will see on the web. Mortgage brokers will scramble to add income verification tools and electronic signature software to online portals. Millennials are savvy with this technology, so lenders will have to up their game to stay competitive. If they want to get the business they need to thrive, then upgrading to digital real estate technologies and sites is a must. Many real estate brokers are looking at different, disruptive technology and business models which include packaging the home loan. Although the one-stop-shop idea for real estate is not new, we are now seeing the technology to implement it.
Buyer trends will affect the property market just as much as global happenings like the Iran strike. While mortgage rates are expected to continue to stay low, the inventory levels available in many popular cities like New Orleans, Los Angeles, Boston, Arlington VA, and Miami will be lower than usual. Landlords and sellers will find that quantity is not always quality. Some buyers may be extending themselves too far in order to compete, so checking references and debt-to-income ratios will be extremely important for people selling property this year.
Real Estate Firms Get More Technologically Savvy
With the explosion of home buying and selling taking place on the internet, we expect technology to play even a larger role in the real estate transaction. we expect to see successful real estate companies focusing on their digital marketing presence. Data driven marketing coupled with larger companies taking their eye off the ball, we expect big changes in 2020. With the pricing for search engine optimization coming down, expect to see smaller companies leveraging digital marketing too. Up until now, huge venture capital funded real estate websites have dominated the landscape. With sites like Zillow changing direction; expanding to the iBuyer market, we expect the larger, more successful real estate brokers to start picking away at real estate search terms.
2020 Will Be a Shift from the Past
With all of the changes barrelling at us at full speed, spearheading by technology, low interest rates and new real estate business models, 2020 is expected to go down as a pivotal change in the way real estate transactions take place with new winners and losers.