The beginning of a new year always brings a feeling of fresh opportunity and 2020 is no different. This year is unique for a variety of reasons; 2020 begins the start of a new decade and there will be a leap year, Winter Olympic games in Tokyo and a presidential election in the United States.
Despite the commotion of 2020, the homebuying market is promising. A recent report by Freddie Mac, a federally sponsored buyer of mortgage loans, predicts the housing market in will remain strong in 2020. The report predicts over $6.1 million in home sales and a surge of more than $785 billion in refinanced mortgage loans.
What are some homebuying trends to look out for in 2020?
A new age of homebuyers
As baby boomers reach retirement and millennials find stability in adulthood, homebuying will change for both generations. According to a study by Harvard Joint Center for Housing Studies, by 2035, one third of U.S. households will be headed by someone over the age of 65.
For those reaching the age of retirement, this could mean downsizing into a more fitting space. Or, it could mean financing a second home somewhere warm for the winter months. Perhaps it means moving out of a city to a home with more acreage. No matter the situation, this population of more than 79 million will continue to prefer to own rather than rent in the new year.
For millennials, most home purchases will be for the first time. The National Association of Realtors’ (NRA) chief economist indicates that 85% of millennials view their home purchase as a good financial investment. Many of these adults have children and pets and no longer consider renting as a valuable option.
Increased competition will help improve balance in the market
In 2020, Redfin predicts low mortgage rates to hover around 3.8%, sparking high buyer interest. This will result in more competition for homebuying options. With fewer homes to choose from in 2020, sellers who may have been waiting for better market stabilization will now have the opportunity to list, with one in four offers expected to face a bidding war compared to only one in 10 in 2019, according to Redfin.
Competition increase will also likely result in an annual price growth up to 6%, enticing more homebuyers and builders to list homes and helping improve the balance between supply and demand in the market through 2020. Low housing inventory and mortgage rate trends will only boost affordability and bring out more buyers in 2020.
What’s it all mean?
Although you may feel uncertain about the future, home buying in the new year is stable. As various generations end the decade, they reach a new potential in homebuying, whether it be for the first time or the fifth.
Make 2020 the year you finally come home. Contact an Evergreen loan officer today about taking the step toward home ownership.