2020 real estate trends to watch


Looking at buying or selling a home next year?  We consulted the financial and real estate experts to determine the top real estate trends for 2020 including how talk of a coming recession might affect the real estate market.

Trying to take advantage of the real estate market has been tricky.  In many markets, buyers have been faced with rising prices and shrinking inventory, leading to competitive bidding situations.  Those looking to sell wonder if they should hold off while the value of their homes increase or if talks of a recession and rising interest rates make selling now more prudent.  Consulting the experts, here are the top real estate trends for 2020.

Will There Be a Recession? 

During the last recession, the United States saw a collapse of the real estate market, the likes of which most people hadn’t seen in their lifetime.  With the current trade war, changes overseas, and the roller coaster stock market, there has been talk that a recession may be looming again.  Zillow surveyed over 100 real estate experts asking their predictions for the economy.  Nearly half of all survey respondents said that the next recession will commence in 2020, with most predicting that it will happen in the first quarter of the year.  But, according to the Zillow survey, “while a housing collapse ushered in the ‘Great Recession’ of 2008 and 2009, most survey respondents don’t think a downturn in the economy will be centered on the housing market this time around.”

Real Estate Trend One – Slower Price Increases

One of the biggest real estate trends for 2020 is that home prices will still rise, but at a slower rate than in previous years.  According to a September 2019 Seattle Times article, “across the country, home prices only grew 3.1% – half as much as a year ago.”  According to George Ratiu, Senior Economist with®, “prices will flatten, but likely not fall.”  Ali Wolf, Director of Economic Research at Meyers Research, a national real estate consulting firm, also believes that “prices will fall marginally” with the most expensive markets such as New York, Miami and Seattle seeing the biggest price corrections.  Mike Grady, President and COO of Seattle-based Coldwell-Banker Bain agrees with Wolf – “clearly the market is moderating.  We’re moving from a ‘hyper-market’ to one where a correction is underway.”  Although Grady believes this will help buyers, especially in higher price markets such as Seattle, he is still cautious.  “While it is the best time to buy that we’ve seen in some time, and buyers are getting some relief, it is still a sellers’ market.”

Real Estate Trend Two – Rising Interest Rates

For the past seven years, interest rates have averaged in the low 3% to mid-4% range, driving home purchases, despite rising home prices.  However, that may be changing.  Freddie Mac recently reported that the average 30-year fixed interest rate rose 13 basis points in mid-September to an average of 3.73% with the 15-year rate rising to an average of 3.21%.  Many financial experts believe rates will continue to increase for 2020.  Financial guru Dave Ramsay predicts rates will go as high as 5% for a 30-year and 4.4% for a 15-year mortgage.  Zillow Senior Economist Aaron Terrazas is less optimistic and believes that mortgage rates will go as high as 5.8%, something not seen for the last ten years.  While in the past rising interest rates were to blame on the federal government, this time the culprit is rising demand for homes.  Which brings us to…

Real Estate Trend Three – Rising Demand, Shrinking Supply

With the oldest ones pushing 40 and the majority in their late 20’s and 30’s, the huge millennial generation is getting older and starting to buy homes – in fact, they will count for 45% of home buyers in 2020.  Rising home prices and interest rates are pushing some millennials to buy sooner rather than later.  According to Dean Rebhuhn of Village Homes and Properties in Woodinville, Washington, “(still) low interest rates, strong job creation and lifestyle changes continue to attract buyers to the market.”

However, there won’t be much inventory.  Although financial expert Ramsay predicts home construction increasing by 8%, he says that there will “still be a shortage of new homes” and that the total “number of homes for sale is expected to rise by only 1%.”  What this means for baby boomers, perhaps looking to downsize and put their home on the market, is that there won’t be a shortage of potential buyers and home values should continue to be strong.

Real Estate Trend Four – Changing Senior Housing Options & Rural Flight

According to a University of Virginia researcher Hamilton Lombard, between now and 2040, the number of adults 65-plus will grow by 90 percent.  By 2035, one in three US households will be headed by someone over 65.  But, while once seniors would retire to planned retirement or golf communities  in places like Arizona or Florida, today’s 65-plus adults are wanting to live in active, walkable neighborhoods moving to more urban areas and upscale mixed generational developments.  The demand for luxury urban living will continue to increase.

At the same time, according to University of Virginia’s Lombard, there will continue to be an increase in rural retirement.  Enticed by a lower housing costs and taxes, seniors are moving to states such as North Carolina, Tennessee and Georgia, something Hamilton calls the “halfback phenomenon” – “halfbacks” referring to retirees from the East Coast moving “halfway back” from Florida to the Mid-Atlantic and Appalachia.  At the same time, according to a Business Insider story, Californians are heading to Idaho, Arizona and Nevada.  Whether moving to the city or country, a 2016 Harvard report states that seniors are increasingly wanting housing that “allows them to ‘age in place’ with zero-step home entrances, single level floorplans and doorways that can be wheelchair accessible.”

Although home price increases are predicted to slow and interest rates predicted to rise for 2020, with demand for housing from millennials looking to buy their first homes and seniors looking to downsize and move away from suburban communities, there should be no shortage of buyers.  Although a recession may be looming next year, all real estate trends point to a strong housing market for 2020.

If you want to see recent real estate trends for your zip code has some great graphs and data. Simply input your zip code and click ‘Market Insights’ in the top right corner.

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