2020 Market Forecast
Posted by VIBE Realty on Monday, January 13th, 2020 at 11:51am.
We're officially riding out the first quarter of 2020, and with a new year under our belts, we're wondering what that could mean for the real estate market. With this year being a year for a strong job market (unemployment is at a 50-year low) and mortgage interest rates also hitting an all-time low (well below historical norms), we’re thinking this could bring us some sustainability. According to The Washington Post, experts are predicting that the market will move sideways rather than up or down - resulting in a moderate growth rate. While a strong job market and low interest rates can result in sustainable real estate, there is a scarcity in housing not only in Minnesota, but also across the nation as a whole, giving us limited inventory for 2020. Buyers seem to be staying in their homes longer, and not enough houses are being built in the meantime which can create somewhat of a bottleneck in the market.
Though scarce, the new homes that are being built will allow new home sales to rise an expected 11%, putting them at a 13-year high. Though existing home sales continue to be held down by lack of supply, those sales will still be increasing an expected 4% in 2020 putting us in a better place than we were at the beginning of 2019. According to NAR (National Association of Realtors), the national median sale price of an existing home is expected to grow to $270,400, an increase of 4.3 percent from 2019.
With attractive interest rates for potential home-buyers, 2020 is a good time to buy. “The benchmark 30-year fixed rate mortgage will hopscotch back and forth over the 4 percent mark for much of 2020, remaining low enough to facilitate home-buying and providing ample refinancing opportunities on those trips below 4 percent,” said Greg McBride, Bankrate.com’s chief financial analyst. That being said however, the tight supply might make this challenging and can reveal some tougher competition. It’s estimated that competition will increase with 1 out of 4 offers facing a bidding war.
Consumers will still be absorbing the available inventory on the market, and sellers can bet on multiple offers for their homes. Increased buying competition will push price growth 6 percent higher in the first half of the year, but as the year goes on, a more balanced supply and demand will allow price growth to moderate at 3 percent.
We're betting on the 2020 market to be competitive and show a slow, yet sustainable growth rate. If you’re planning on buying or selling this year, or simply wondering what your home could be worth - contact us here for a consultation or click here for a home evaluation. Our team at VIBE Realty is happy to help.