2020 Housing Market: What You Should Know
Thinking about changing it up on the home front in 2020? Whether you’re planning on buying, selling, or just exploring options of what to do with your house, here are some key trends impacting the U.S. real estate market that you should be aware of.
Boom times continue
While a quick scan of the headlines on any given day might suggest the doom and gloom of a potential recession looming on the horizon, in reality most economic indicators point to continued strength in the real estate market throughout 2020. According to The Urban Land Institute’s Emerging Trends in Real Estate ® 2020 report, as investors from around the world continue to view the U.S. as a prime place to park their dollars, home sales are expected to remain strong throughout the year.
Adding to this, interest rates remain low, which will help keep demand high for new mortgages and buyers interested in moving to new digs. In combination with a shortage of new housing in many markets, these factors could lead to overall price growth for the year.
Lower cost cities = higher growth markets
Rising housing costs, especially in already expensive coastal cities (looking at you New York and California), may create shifts in relocation trends including flight to cheaper cities. For example, at Sundae we’ve worked with a number of customers in California who’ve sold their house and moved to more affordable cities in the midwest and south.
Census data supports what we’ve seen, showing that approximately 691,000 people moved from California to another U.S. state in 2018, with Texas, Arizona, Washington, Nevada, and Oregon as their top destinations. Recent data from moving company United Van Lines also show net outflows, especially of retirees, from high cost states like New York and New Jersey.
New ways of completing old transactions
A potential consequence of higher housing costs is that while sellers may be able to ask more for their homes, they’re likely to get fewer offers in total due to more buyers being priced out of the market. This could lead to longer listing times and increased stress for those who go the traditional route of marketing their homes on the MLS.
What this means is that the demand for alternatives to the conventional home sales process in 2020 and beyond will only get stronger. Millennials are now the largest home purchasing demographic and they prefer to do everything online, from researching to buying, so we’re seeing technology-driven real estate companies innovate and change the sales process in unexpected ways (you can read our guide to one of these methods called iBuying).
For example, off-market selling will become a more common approach for many homeowners who are seeking convenience and speed in completing a transaction. This divide between established and emerging ways of selling may drive real estate agencies to either push back on or partner with large home investment companies who are driving changes in the market.
This has already been happening to some extent. As real estate agents have increasingly competed with online listing companies, the phenomenon of pocket listings has increased in popularity. Pocket listings are houses for sale that are kept off the MLS so that agents representing them can reserve them for exclusive buyers. As of November 2019, the National Association of Realtors voted to ban this practice.
Boomers are downsizing
Another big change related to demographics is the growing trend in downsizing. As the Baby Boomer generation ages, we expect the number of households looking to downsize to increase next year and in coming years. According to a recent article in the Wall Street Journal, boomers are preparing to sell approximately one quarter of America’s homes over the next two decades.
This means that a lot of older, lived-in homes will need to be sold. These older homes are most often sold directly to off-market cash buyers in “as-is” condition. The buyers restore them before the next family moves in. Sundae has created a marketplace to help owners sell more easily, quickly, and for a higher price.
The last word
Barring other macroeconomic events, we expect the housing market to remain stable in 2020 overall. But as always in the real estate business, local and regional factors are what cause the biggest shifts between boom and bust, so be sure to do the research on what’s going on in your market as you embark upon your real estate journey.
If you have questions about what the future holds for your housing situation, keep in mind that Sundae can offer a home assessment, scope of work for necessary repairs, and help you get a cash offer free of charge. Helping you get the best outcome for your needs is our mission.