Happy 2020! We are kicking off the real estate year in good shape, in the midst of the longest economic expansion in U.S. history! Even with all this growth, economists believe there is room for more, and that the economy will remain positive throughout the year. So here now, is our 2020 real estate market forecast.
Given that recessions are a natural part of a business cycle, we know that this period of record growth will inevitably end, and we bet you’re wondering how an eventual recession will impact the real estate market.
2020 Real Estate Market Forecast – What About A Recession?
A lot of Americans believe a recession would lead to a decline in housing prices on the Island, like we saw in the Great Recession of 2008, but the real estate market crash we experienced was not typical at all. It was the WORST economic downturn we’ve seen since the Great Depression of the 1930’s.
During the last five recessions, real estate prices often went up. Only in 1990 and 2008 did the prices decline, leaving it to reason that real estate continues to be a sound investment.
So what can historical precedent—combined with today’s data—tell us about the future of real estate on the Island and beyond? Here’s where experts predict the housing market is headed in 2020.
2020 Real Estate Market Forecast – Home Prices Will Continue To Rise
Economists predict U.S. housing prices will continue to rise, regardless of a recession. In fact, CoreLogic forecasts a faster rate of growth for home prices in 2020 than we saw in 2019, with the biggest gains at the lower end of the market.
“Low interest rates and a shortage of starter homes will continue to push up prices,” explains Arch MI Chief Economist Ralph DeFranco. “This is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry-level homes”.
What does it mean for you regarding buying a home or investment property on Martha’s Vineyard? If you have the ability and desire to buy now, don’t let a fear of recession or falling prices hold you back. Economists expect home values, as well as rent prices, to continue rising. So you’ll likely pay more the longer you wait.
2020 Real Estate Market Forecast – Limited Inventory Continues
Americans are moving less often. In 2019, the average homeowner had resided in their home for 13 years, up from just eight years in 2010. That means there are fewer homes on the market for those who want to buy. Over the last several years, we have seen a reduced inventory on the Island, and it continues to be limited.
It’s possible that an increase in new construction could offer some relief. This year, the National Association of Realtors expects single-family housing starts to reach their highest level since 2007.
However, it probably won’t be enough to meet current demand. “In 2020, we expect inventory to struggle to grow and could instead reach a historic low level,” writes Realtor.com Senior Economist George Ratiu. Also, this will not be reflected on the Island since new construction is not as common.
What does it mean for you? If you’re planning to buy a vacation home or starter home, start your search early, and be prepared to compete for the best listings. We can help you assess your options, including those properties that offer new construction.
While national real estate predictions can provide a “big picture” outlook, real estate is local, and Martha’s Vineyard presents a unique set of challenges. If you’re considering buying or selling a home, contact us to schedule a free consultation, email us at firstname.lastname@example.org or call us, 508.627.4567 ext 2.
Our team of real estate professionals at Point B can guide you through the issues most likely to impact sales in our area, and we can help develop a plan to meet your real estate goals this year.
2020 Real Estate Market Forecast – Mortgage Rates Are Expected To Remain Low
Low mortgage rates make homeownership more affordable for many looking to buy. Fortunately, the Mortgage Bankers Association expects rates to remain low, at around 3.7%, through mid-2021.
However, some experts caution that unforeseen factors could cause rates to rise unexpectedly. “We recommend borrowers with long-term plans of staying in their homes to lock in a low rate now because there’s no
telling how long these low rates will last,” warns Preetam Purohit, a capital markets trader at Embrace Home Loans.
What does it mean for you? If you’re looking to buy a home or real estate investment, act soon to lock in a historically low mortgage rate. It will minimize your monthly payment and could save a lot of money over the long term. If you plan to stay in your current home, perhaps it’s time to look into refinancing your mortgage with today’s rates. Luckily, our local lenders are very helpful in mortgages on the Island. Here is what Money.com has to say about mortgages and working with your local lender.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
1. NBC News – https://www.nbcnews.com/business/economy/what-impending-recession-new-survey-shows-most-people-think-they-n1098511
2. Curbed -https://www.curbed.com/2019/1/10/18139601/recession-impact-housing-market-interest-rates
3. HousingWire -https://www.housingwire.com/articles/corelogic-expects-home-prices-to-do-this-in-the-next-12-months/
4. Forbes -https://www.forbes.com/sites/alyyale/2019/11/15/2020-housing-outlook-expert-predictions-for-mortgage-rates-home-prices-tech-and-more/#4993a7c2935b
5. Redfin – https://www.redfin.com/blog/homeowners-staying-in-their-homes-longer/
6. National Association of Realtors – https://www.nar.realtor/newsroom/expect-continued-economic-growth-slower-real-estate-price-gains-and-small-chance-for-recession-in
7. Housing Wire – https://www.housingwire.com/articles/builders-are-coming-to-the-housing-markets-rescue/
8. Realtor.com – https://www.realtor.com/research/2020-national-housing-forecast/
9. MBA Mortgage Market Forecast November 2019 – https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
10. YCharts – https://ycharts.com/indicators/30_year_mortgage_rate
11. Dallas Morning News – https://www.dallasnews.com/sponsored/real-estate/2019/11/23/experts-predict-where-mortgage-interest-rates-land-in-2020/
12. Realtor.com – https://www.realtor.com/news/trends/biggest-changes-coming-in-2020-real-estate-and-tips-for-buyers-and-sellers/