real estate outlook for 2020
Real Estate

Here is Your Real Estate Outlook 2020

The Fed has a major impact on the Real Estate Outlook for 2020. Fed Chairman Powell has stated The Fed predicts no rate changes for 2020, so what is the predicted outcome for the new year? How will this affect the housing market and mortgage rates into 2020? 

In 2019, rates of under 4% were achievable for the most polished credit scores.  Next year, 4% and under will continue, with the forecast of 3.8% for the year by the National Association of Realtors panel consensus forecast.  What does the real estate outlook in 2020 mean for supply and demand?

Builder confidence, as reported by the National Association of Home Builders, ended 2019 on a high.  This, along with housing starts and permitting activity increasing through the end of November, should lend to 2020’s real estate outlook to keep on pace with the average.  What will sustain this growth is the maturation of Millennials (born between 1982 and 2000), who are coming of age and finally earning enough to afford their first homes.  Those who have been the hardest hit by the Great Recession, along with the aging Boomer population will allow demand to keep pace with supply.  Millennials migrating from apartment city living are moving to the suburbs in droves to start their families.  Those who are now in their late 20’s and mid 30’s, have abstained from earlier generations’ marriage at a young age and early 20’s family starting, will now be entering the suburbs with the means to do so.

In major metro areas, the competition for suitable housing will remain sharp, with housing prices expected to climb between 3-4% over the course of the year.  The most important thing to remember when buying a home is to not fall into the trap of leverage.  Real Estate agents will show you a house that is well beyond your budget with ease.  Both agents, buyer and seller, work for the Seller.  The seller pays the agents’ commission, the buyer pays the closing costs.  They want that house sold for the highest possible price, so they can earn their split commissions (6% split two ways, typically).  You as the buyer have a responsibility to not let them run away with YOUR imagination.  Buy your house with idea that it is a HOME first, and second an investment.  As I have mentioned earlier, there are far better investments than a house, be it passive or active.  Remember the costs associated with home ownership and do not let your agent control your narrative.

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