The real estate market is constantly changing, based on a range of economic factors. When you're a real estate professional, keeping up with the trends in the market is essential to properly tailor your marketing and build your business.
Being a real estate professional who knows what's going on in the market is one of the most important ways you can create a competitive advantage.
If you're someone who is thinking about buying or selling a home in 2020 or you're an investor, it can be equally important to have a general understanding of real estate trends.
The following are some things we're likely to see in the real estate market in 2020.
Mortgage Rates on the Decline
Mortgage rates are an integral part of the real estate market-probably one of the most important factors that determine the demand for housing in fact.
Mortgage rates went down throughout 2019, dipping below 4%. In 2020, economists are forecasting that mortgage rates will stay similarly low or perhaps go down even more.
Analysts currently believe interest rates will stay around 3.7% for a 30-year mortgage. They could hover around 3.2% for a 15-year mortgage.
However, there's no guarantee here, and analysts and real estate professionals are keeping a close eye on things like trade wars and tariffs.
When mortgage rates are on the low end, there are going to be more motivated buyers, but if they do happen to go up even slightly, sellers might anticipate their home stays on the market a little longer.
The Millennial Market
While younger buyers are going to start to make more of an impact on the real estate market in coming years, the Millennial generation still makes up the majority of home buyers.
In 2018, Millennials were 37% of home buyers, and that's going to continue into 2019.
Real estate agents and sellers have to be Millennial-savvy as a result.
Millennial homebuyers, first and foremost go online and especially use their mobile devices to check out real estate. According to data cited on DaveRamsey.com, more than 80% of Millennial homebuyers in 2018 found their home on a mobile device.
This means that real estate professionals and sellers need to make it a priority to go mobile with listings and marketing. High-quality listing photos and video footage are also an essential component of marketing to Millennial buyers.
Millennials are also more concerned with location and amenities than they are with the size of a home. A good neighborhood can go a lot further than an extra bedroom for Millennials, so marketing should focus on these location and amenity-based features.
Other features that tend to rank well in the eyes of the average Millennial buyer include a dedicated laundry room, outdoor space, and storage in the garage.
The Push For More Starter Homes
There is a limited inventory of starter and entry-level homes, and it's creating pressure in the market and causing prices to go up as well. One reason for the limited inventory is the fact that Boomers are staying in their homes for longer, meaning less availability.
As a result, it's likely that in 2020 homebuilders will work on increasing the availability of starter homes.
The demand for starter homes will likely remain strong through next year especially with low unemployment rates and relative increases in wages, of course, paired with mortgage rates that are hovering near record lows.
Expansion of Fintech
Financial technology or "fintech" has seen an explosion in the past few years, and that's going to impact the real estate market in a big way in the coming years.
For example, mortgage lenders are jumping into the world of fintech increasingly.
Many lenders are integrating some elements of fintech into the mortgage process, and this offers benefits to the borrower, including lower costs and a more streamlined experience.
Additionally, companies like Zillow and Quicken Loans are expanding their coverage of the marketplace by offering lending products.
Another fintech trend to watch for is the model behind iBuyer. With iBuyer, a company instantly buys a home, and then fixes it up and resells it, making them a one-stop-shop for sellers.
Higher Prices
Median home prices in the U.S. in 2019 were up to $316,000, which was a record high. There will likely be more increases in 2020, although modest.
Overall in 2019, home prices grew by 3.3%. They are expected to rise by 2.8% in 2020.
This can be good news for sellers, but not so much for buyers, who fear they're being priced out of the market.
Hot Markets
Based on the expected increases in the average sales price and overall sales volume for the year, there have been predictions on the hot markets for 2020. These are markets you might not expect.
For example, Boise City, Idaho, McAllen-Edinburg-Mission, Texas and Tucson, Arizona, are the top three markets likely to see the most growth.
These markets all have some things in common. Affordability is the most important factor. The average selling price for all the predicted hot markets for 2020 have selling prices well below the national average.
These markets also saw a strong 2019, and they have seen good job growth as well.
They are smaller markets as well, whereas the larger markets in the U.S. tend to be overheated.
Finally, back to the Millennials-many of whom are fleeing big cities in favor of the suburbs.
Millennials and younger buyers are moving away from cities because of the extremely high prices. However, when it comes to suburban real estate, they often want some of the things they enjoyed in the city, such as walkability in their communities and access to public transportation.
This could mean the development of more neighborhoods with those walkable amenities younger buyers appreciate so much.
Of course, no one has a crystal ball but these are likely, based on current analysis, to be some of the most important real estate trends in the upcoming new year.
