The 2020 Real Estate Projections That May Surprise You
This will be an interesting year for residential real estate. With a presidential election taking place this fall and talk of a possible recession occurring before the end of the year, predicting what will happen in the 2020 U.S. housing market can be challenging. As a result, taking a look at the combined projections from the most trusted entities in the industry when it comes to mortgage rates, home sales, and home prices is incredibly valuable – and they may surprise you.
Mortgage Rates
Projections from the experts at the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac all forecast mortgage rates remaining stable throughout 2020:
Since rates have remained under 5% for the last decade, we may not fully realize the opportunity we have right now.
Here are the average mortgage interest rates over the last several decades:
1970s: 8.86%
1980s: 12.70%
1990s: 8.12%
2000s: 6.29%
Home Sales
Three of the four expert groups noted above also predict an increase in home sales in 2020, and the fourth sees the transaction number remaining stable:
With mortgage rates remaining near all-time lows, demand should not be a challenge. The lack of available inventory, however, may moderate the increase in sales.
Home Prices
Below are the projections from six different expert entities that look closely at home values: CoreLogic, Fannie Mae, Ivy Zelman’s “Z Report”, the National Association of Realtors (NAR), Freddie Mac, and the Mortgage Bankers Association (MBA).Each group has home values continuing to improve through 2020, with four of them seeing price appreciation increasing at a greater pace than it did in 2019.
Is a Recession Possible?
In early 2019, a large percentage of economists began predicting a recession may occur in 2020. In addition, a recent survey of potential home purchasers showed that over 50% agreed it would occur this year. The economy, however, remained strong in the fourth quarter, and that has caused many to rethink the possibility.
For example, Goldman Sachs, in their 2020 U.S. Outlook, explained:
“Markets sounded the recession alarm this year, and the average forecaster now sees a 33% chance of recession over the next year. In contrast, our new recession model suggests just a 20% probability. Despite the record age of the expansion, the usual late-cycle problems—inflationary overheating and financial imbalances—do not look threatening.”
Bottom Line
Mortgage rates are projected to remain under 4%, causing sales to increase in 2020. With growing demand and a limited supply of inventory, prices will continue to appreciate, while the threat of an impending recession seems to be softening. It looks like 2020 may be a solid year for the real estate market.
Buying a Home Early Can Significantly Increase Future Wealth
According to an Urban Institute study, homeowners who purchase a house before age 35 are better prepared for retirement at age 60.
The good news is, our younger generations are strong believers in homeownership.
According to a Freddie Mac survey,
“The dream of homeownership is alive and well within “Generation Z,” the demographic cohort following Millennials.
Our survey…finds that Gen Z views homeownership as an important goal. They estimate that they will attain this goal by the time they turn 30 years old, three years younger than the current median homebuying age (33).”
If these aspiring homeowners purchase at an early age, the Urban Institute study shows the impact it can have.
Based on this data, those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-20s and early-30s had close to $50,000 left, but traditionally purchased more expensive homes.
Although the vast majority of Gen Zers want to own a home and are somewhat confident in their future, “In terms of financial awareness, 65% of Gen Z respondents report that they are not confident in their knowledge of the mortgage process.”
Bottom Line
As the numbers show, you’re not alone. If you want to buy this year but you’re not sure where to start the process, meet with a local real estate professional who can help you to understand the best steps to take from here.
Top Renovations for Maximum Return on Investment
Some Highlights:
If you’re planning on selling your house in 2020, these are the top renovations that will give you the highest Return on your Investment.
Regardless of how long you’re planning on staying in your current home, it’s smart to be aware of which home renovations add the most value.
The exterior of a house is the first thing buyers see when searching for a home. Upgrading your roof or siding will ensure your home leaves a great first impression!
Expert Insights on the 2020 Housing Market
When closing out another year, it’s normal to wonder what’s ahead for the housing market. Though there will be future inventory issues, we expect interest rates to stay low and appreciation to continue.
Here’s what three experts are saying we’ll likely see in 2020:
Danielle Hale, Chief Economist at realtor.com
“I think the biggest surprise from the forecast is how long the market is staying in this low inventory environment, especially as Millennials are in a major home-buying phase…sellers will contend with flattening price growth and slowing activity with existing home sales down 1.8%. Nationwide you can look to flat home prices with an increase of less than 1%.”
Mike Fratantoni, Chief Economist at Mortgage Banker Association (MBA)
“Interest rates will, on average, remain lower…These lower rates will in turn support both purchase and refinance origination volume in 2020.”
Skylar Olsen, Director of Economic Research at Zillow
“If current trends hold, then slower means healthier and smaller means more affordable. Yes, we expect a slower market than we’ve become accustomed to the last few years…consumers will continue to absorb available inventory and the market will remain competitive in much of the country.”
As we can see, we’re still going to have a healthy market. It is forecasted to be a more moderate (or normal) market than the last few years, but strong enough for Americans to continue to believe in homeownership and to capitalize on the opportunities that come with low interest rates.
Bottom Line
If you’re wondering what’s happening in your market, contact a local real estate professional today.
3 Mistakes to Avoid When Selling Your Home in 2020
It’s exciting to put a house on the market and to think about making new memories in new spaces, but we can have deep sentimental attachments to the homes we’re leaving behind, too. Growing emotions can help or hinder a sale, depending on how we manage them.
When it comes to the bottom line, homeowners need to know what it takes to avoid costly mistakes. Being mindful of these things and prepared for the process can help you avoid some of the most common mishaps when selling your house.
1. Overpricing Your Home
When inventory is low, like it is in the current market, it’s common to think buyers will pay whatever we ask for when we price our homes. Believe it or not, that’s far from the truth. Don’t forget that the buyer’s bank will send an appraisal to determine the fair value for your home. The bank will not lend more than what the house is worth, so be mindful that you might need to renegotiate the price after the appraisal. A real estate professional will help you to set the true value of your home.
2. Letting Your Emotions Interfere with the Sale
Today, most homeowners have been living in their houses for an average of 10 years (as shown in the graph below):
This is several years longer than what used to be the norm, since many homeowners have been recouping from negative equity situations over the past 10 years. The side effect, however, is when you live for so long in one place, you may get even more emotionally attached to your space. If it’s the first home you bought after you got married or the house where your children grew up, it very likely means something extra special to you. Every room has memories and it’s hard to detach from the sentimental value.
For some homeowners, that makes it even harder to negotiate, separating the emotional value of the home from the fair market price. That’s why you need a real estate professional to help you with the negotiations in the process.
3. Not Staging Your Home
We’re generally quite proud of our décor and how we’ve customized our houses to make them our own personalized homes, but not all buyers will feel the same way about your design. That’s why it’s so important to make sure you stage your home with the buyer in mind. Buyers want to envision themselves in the space, so it truly feels like their own. They need to see themselves in the space with their furniture and keepsakes – not your pictures and decorations. Stage and declutter your home so they can visualize their own dreams as they walk through your house. A real estate professional can help you with tips to get your home ready to stage and sell.
Bottom Line
Today’s seller’s market might be your best chance to make a move. If you’re considering selling your house, sit down with a local real estate professional to help you navigate through the process while avoiding common seller mistakes.
2020 Forecast Shows Continued Home Price Appreciation
Questions continue to rise around where home prices will head in 2020. The latest forecast from CoreLogic shows continued appreciation at 5.4% over the next year:
Additionally, ARCH Mortgage Insurance Company in their current Housing and Mortgage Market Review revealed their latest ARCH Risk Index, which estimates the probability of home prices being lower in two years. Based on the most recent results, 32 of the 50 U.S. states (plus D.C.) had a minimal probability of lowering by 2021.
Bottom Line
Experts forecast home price appreciation to continue at a moderate rate as we move through 2020 and beyond. With appreciation growing, now is a great time to reach out to a real estate professional and plan for your next move.
Get Your House Ready To Sell This Winter
Some Highlights
Winter is a great time to list a house, since inventory is traditionally low, and most sellers are holding off until spring to put their homes on the market.
Waiting for warmer weather when more competition is on the market will only put your house up against many more choices for buyers.
Get your house ready to sell now with quick and easy fixes that make a big impact.
Holiday Gifts Are Not the Only Hot Things Right Now
Black Friday is behind us and holiday gifts are flying off the shelves in stores and online. Unlike last year, however, there’s another type of buyer that is very active this winter – the homebuyer.
Each month, ShowingTime releases their Showing Index, which tracks the average number of appointments received on active U.S. house listings. The latest index revealed:
“Traffic was more active once again compared to 2018, as the nation saw its third straight month of higher year-over-year showing activity…The 5.5% increase in showings nationwide was the largest jump in activity during the now three-month streak of year-over-year increases vs. 2018.”
The same report indicates showings increased in every region of the country:
The South increased by 10.8%
The West increased by 8.6%
The Northeast increased by 3.8%
The Midwest increased by 1.5%
Why is the traffic more active?
One of the main reasons buyer traffic has increased year-over-year is that mortgage rates have fallen dramatically. According to Freddie Mac, the average mortgage rate last December was 4.64%. Today, the rate is almost a full percentage point lower!
Bottom Line
There are first-time, move-up, and move-down buyers actively looking for the home of their dreams this winter. If you’re thinking of selling your house in 2020, you don’t need to wait until the spring to do it. Your potential buyer may be searching for a home in your neighborhood right now.
December 2019: The Buyer Stakes Are High Because Inventory Is Low
The reality of what we’re seeing this month is that homes are selling fast. In today’s strong seller’s market, bidding wars are common and expected with starter or entry-level homes.
In most areas of the country, first-time buyers have been met with fierce competition throughout their home buying experience. Some have been out-bid multiple times before finally going into contract on a home to call their own.
Right now, inventory is the big challenge. Here’s what we know today:
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.9-month supply of homes for sale, which can drive this kind of hefty buyer competition. Remember, anything less than 6 months of inventory is a seller’s market.
Even though the month’s supply of inventory is not increasing, ironically, the number of homes for sale is. This means homes are coming up for sale, but they’re being sold quickly. The graph below shows the year-over-year change in inventory over the last 12 months.
As depicted above, the percentage of available inventory has fallen for four consecutive months when compared to the previous year.
So, what does this mean? If you’re a buyer, be sure to get pre-approved for a mortgage and be ready to make a competitive offer, so you can move quickly. Chances are, homes high on your wish list are likely going to go fast.
Bottom Line
If you’re thinking of buying a home, make sure you’re taking the right steps at the beginning of the process, so you’re a top contender if you ultimately find yourself in a bidding war. Reach out to a local real estate professional to determine what you need to do to make your move toward home ownership.
Have You Outgrown Your Home?
It may seem hard to imagine that the home you’re in today – whether it’s your starter home or just one you’ve fallen in love with along the way – might not be your forever home.
The good news is, it’s okay to admit if your house no longer fits your needs.
According to the latest Home Price Insights from CoreLogic, prices have appreciated 3.5% year-over-year. At the same time, the National Association of Realtors (NAR) reports inventory has dropped 4.3% from one year ago.
These two statistics are directly related to one another. As inventory has decreased and demand has increased, prices have been driven up.
This is great news if you own a home and are thinking about selling. The equity in your house has likely risen as prices have increased. Even better is the fact that there’s a large pool of buyers out there searching for the American dream, and your home may be high on their wish list.
Bottom Line
If you think you’ve outgrown your home, reach out to a real estate professional to discuss local market conditions and determine if now is the best time for you to sell.
December 2019 Real Estate News & Updates
Please let me know if you would like to receive my monthly newsletter by messaging me your email address. I promise this will be the only thing I will email you and I will not share your email address.
Thank you,
Kate Spadarotto
The Current 5 Most Popular Real Estate Questions and Answers
Are Mortgage Rates Going to Go Up?
With the price of homes going up due to a strong economy and high demand, mortgage rates are helping to balance it all out by keeping things affordable.
Essentially, the lower your mortgage rate, the lower your monthly payments.
With Freddie Mac predicting that mortgage rates should stay where they are for the next 12 months, this shouldn’t be changing anytime soon.
2. Is Now a Good Time to Buy or Sell?
The short answer is: yes and yes.
As said above, low mortgage rates mean it’s a great time for anyone to buy: whether it’s for the first, second or fifth time. This is especially true for someone looking to upgrade their home and purchase one in a higher bracket.
The low mortgage rate will help you afford more house at a lower monthly payment.
Combine that with low inventory and high demand, and you have an equally good seller’s market. This goes especially for homes in the low to mid-range.
3. Are Home Prices Going to Keep Rising?
Data from the leading experts in real estate and mortgage lending says yes.
But before anyone panics, that means now is the best time to buy and sell.
With mortgage rates expecting to stay where they are and an anticipated 3.5-5% price appreciation happening in the next year, this is without a doubt the best time to buy.
Waiting only means one thing: spending more for the same house.
Take a look at our price appreciation slide so you can show them the facts to back it up.
4. Do I Need to Update My Home Before I Sell It?
Making updates could mean a higher asking price. It could also mean investment loss.
Depending on the type of updates needed, the market’s current low inventory levels put any home that hits the market in a good position to sell. Yes, some homeowners prefer to buy a “turn-key” home. On the flip side, others may want to make the updates themselves, so everything is to their taste.
Check out this post on which updates have the highest return on investment.
5. Is a Recession Going to Cause Home Prices to Fall?
Yes, it’s very likely a recession will hit either next year or the year after. However, this in no way means a housing market catastrophe like the one that occurred in 2008.
Here’s why:
-Of the last five recessions, only two saw a decline in home values with three seeing increases.
-The two that saw declines were in 1991 (-1.9%) and of course, 2008 (-19.7%).
-The current market does not remotely resemble the one before the 2008 crash.
-The top causes for the next recession have nothing to do with the housing market, unlike that of 2008 when risky borrowing led to a bubble that was bound to burst.
Have You Budgeted for Closing Costs?
Saving for a down payment is a key step in the homebuying process, and it’s not the only piece you need to include in your budget. Another factor that’s important to plan for is the closing costs required to obtain a mortgage.
What Are Closing Costs?
According to Trulia,
“When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”
For those who buy a $250,000 home, for example, that amount could be between $5,000 and $12,500 in closing fees. Keep in mind, if you’re in the market for a home above this price range, your costs could be significantly greater. As mentioned before,
Closing costs are typically between 2% and 5% of your purchase price.
Trulia gives more great advice, saying,
“There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.
The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need.”
Bottom Line
Reach out to your lender and a local real estate professional to discuss the homebuying process, to be sure your plan includes budgeting for what you need to purchase your dream home – without any surprises!
Millenials Are on the Move as First-Time Home Buyers
Some Highlights:
According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time home buyers is 32.
With more millennials entering a home buying phase of life, they are driving a large portion of the buyer appetite in the market, keeping buyer activity strong.
More and more “old millennials” (ages 25-36) are realizing that home ownership is now within their grasp, and they’re actively dominating the first-time home buyer market!
Buyers Are Looking For Your Home
Some Highlights:
Existing Home Sales are currently at an annual pace of 5.46 million.
The inventory of existing homes for sale remains below the 6 months needed for a normal market and is now at a 3.9-month supply.
Inventory remains low due to high demand from buyers who are still looking for a house to buy!
Is A Bigger House Within Your Budget?
At this time of year, many families come together to celebrate the season. It’s also the time when many realize their homes are just not quite big enough to host all of their guests and loved ones. Are you one of those homeowners dreaming for a larger space to call home?
You may have enough equity in your current home to move up.
According to the Q3 2019 U.S. Home Equity & Underwater Report by ATTOM Data Solutions,
“14.4 million residential properties in the United States were considered equity rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.”
This means that one in four of the 54 million mortgaged homes in the U.S. have at least 50% equity. If these homeowners decide to sell, they can use their equity to put toward the purchase of a new home. Maybe you’ll be one of them.
NAR recently released their 2019 Profile of Home Buyers and Sellers showing that,
“This year, home sellers cited that they sold their homes for a median of $60,000 more than they purchased it, up from $55,500 the year prior. This accounted for a 31 percent price gain, up from 29 percent the year before.”
Here’s the equity gain breakdown based on the number of years these sellers lived in their homes:
Bottom Line
If you’re one of the many homeowners with big dreams of owning a larger home, contact a local real estate professional today. Working with a trusted advisor to find out how much equity you have is a great step toward putting your move-up plan in motion.
5 Reasons to Sell This Winter
Below are five compelling reasons to list your house this winter.
1. Demand Is Strong
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase, and are in the market right now. More often than not, in many areas of the country, multiple buyers are competing with each other to buy the same home.
Take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now
Inventory is still under the 6-month supply needed for a normal housing market. This means in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market.
Historically, a homeowner would stay an average of six years in his or her home. Since 2011, that number has hovered between nine and ten years. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
Many homeowners were reluctant to list their homes over the last couple of years, for fear they would not find a home to move into. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you decide to sell.
3. Buyers Are Serious at This Time of Year
Traditionally, homeowners think about spring as a great time to list their homes, when more buyer traffic may be out there actively searching. In the winter, however, the buyers who are seeking a home – whether for relocation or otherwise – are serious ones. They’re ready to make offers and they’re eager to move, often quickly. Your house may be exactly what they’re looking for, so listing when other potential sellers are holding off may be your best opportunity to shine.
4. There Will Never Be a Better Time to Move Up
If your next move will be into the premium or luxury market, now is the time to move up. There is currently ample inventory for sale at higher price ranges. This means if you’re planning on selling a starter or trade-up home and moving into your dream home, you’ll be able to do that now. Demand for your entry-level home is high, and inventory in the luxury or premium market is too.
According to CoreLogic, prices are projected to appreciate by 5.6% over the next year. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and in your mortgage) if you wait.
5. It’s Time to Move On With Your Life
Look at the reason you decided to sell in the first place and determine whether it’s worth waiting. Is money more important than being with family? Are you ready to go on with your life the way you think you should?
Only you know the answers to these questions. You have the power to take control of the situation by putting your home on the market this winter. Perhaps the time has come for you and your family to move on and start living the life you desire.
Tips to Sell Your Home Faster
When selling your house, there are a few key things you can prioritize to have the greatest impact for a faster sale:
1. Make Buyers Feel at Home
Declutter your home! Pack away all personal items like pictures, awards, and sentimental belongings. Make buyers feel like they belong in the house. According to the 2019 Profile of Home Staging by the National Association of Realtors, “83% of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home.”
Not only will your house spend less time on the market, but the same report mentioned that, “One-quarter of buyers’ agents said that staging a home increased the dollar value offered between 1 – 5%, compared to other similar homes on the market that were not staged.”
2. Keep It Organized
Since you took the time to declutter, keep it organized. Before buyers arrive, pick up toys, make the bed, and put away clean dishes. According to the same report, the kitchen is one of the most important rooms to stage in order to attract more buyers. Put out a scented candle or some cookies fresh from the oven. Buyers will remember the smell of your home.
3. Price It Right
More inventory coming into the market guarantees there will be some competition. You want to make sure your home is noticed. A key to selling your house is ensuring it is Priced to Sell Immediately (PTSI). This means you’ll be driving more traffic to your property, and ultimately creating more interest in your home.
4. Give Buyers Full Access
One of the top four elements when selling your home is access. If your home is available anytime, that opens up more opportunity to find a buyer right away. Some buyers, especially those relocating, don’t have much time available. If they cannot get into the house, they will move on to the next one.
Bottom Line
If you want to sell your home in the least amount of time at the best price with as little hassle as possible, reach out to a local real estate professional to find out what you need to do to sell your home as quickly as possible.
Buyer Demand Growing in Every Region
Buyers are out in full force this fall, increasing the demand for homebuying in all four regions of the country.
According to the latest ShowingTime Showing Index,
“Home showing activity was up again nationwide with a 4.6 percent rise in traffic, as the traditionally slow fall season began with a marked boost in buyer interest.”
Buyers clearly have the right idea, as mortgage rates have dropped over a full percentage point since the fall of 2018. They’ve hovered in a historically low range since this summer, making the overall cost of homeownership significantly more attractive and affordable.
Here’s the breakdown of how ShowingTime reports current buyer traffic patterns across the country:
“The West Region, which until August had experienced 18 consecutive months of flagging home buyer traffic, lead the four regions in year-over-year improvement with an 8.9 percent increase in buyer activity.
The South followed with a 6.4 percent increase, the largest such improvement in the region since April 2018, with the Northeast Region’s 5.6 percent increase the next largest among the four regions.
The Midwest’s more modest 0.8 percent year-over-year growth rounded out the nation’s promising month.”
With ShowingTime reporting “nationwide growth for the second consecutive month, a first since December 2017 – January 2018”, it’s one more reason why selling your house this winter is the way to go. List while buyers are on the market, before competition with other sellers pops up in your neighborhood.
Bottom Line
If you’re thinking of waiting until spring to sell, think again! Reach out to a local real estate professional to discuss listing your house now while buyer traffic is actively surging throughout the country.