What Home Buyers and Sellers Can Expect in 2020
When the clock turned to midnight on January 31st, 2019, millions of Americas raised their glasses to the start of a new year and hopefully beginning. Nobody could have predicted the turn of events that have shaped this year. The Coronavirus (COVID-19) pandemic has changed the way people live, work, dine, learn, socialize, and spend and the real estate market has seen its share of changes as well. With many people out of work, home sales and listings have declined considerably as people second-guessed purchasing a new home. However, home sales will rebound in the late summer and fall, driven by millennials eager to own a home of their own, according to a revised forecast for 2020 by realtor.com®’s economists.
2020 Housing Market Predictions – COVID-19 Update
● Home price growth will flatten, with a forecasted increase of 1.1 percent
● Inventory will remain low, but the rate of decline steadies and the mix of homes for sale shifts toward greater availability of lower-priced homes
● Mortgage rates remain low and may slide under 3 percent by the end of the year
● Home sales are constrained by low inventory and diminished seller and buyer confidence as the effects of COVID linger in the labor market
● Buyers seeking affordability and space drive interest in the suburbs
According to realtor.com®’s buyers will likely see fewer homes available for sale and periods of low-churn or few fresh listings like we’ve seen this spring, especially during local COVID flare-ups. The limited number of homes for sale will keep home prices relatively stable and this may give buyers using a mortgage (especially Millennials) some relief against investors and other cash-heavy buyers who are expected to play a smaller role.
While mortgage rates will be favorable, qualifying criteria will be tougher than recent years as lenders seek to mitigate their own risks against economic uncertainty. This will mean buyers need more cash for a down payment and higher credit scores in order to get a loan with many lenders. Shopping around for the best rates and terms will be particularly important.
After extensive time spent at home, home buyer preferences for space and quiet have gained renewed attention. These preferences plus a renewed focus on preparing for the unexpected are likely to keep affordable suburbs and secondary markets top of mind for many buyers. Already, we’ve seen a trend of more large metro shoppers looking for housing outside of their current metro which is likely to continue.
Sellers, many of whom will also be buyers, will grapple with the buyer conditions as well as their own set of challenges. With a slower pace of sales and longer time on market, it will be more difficult to time a home sale and subsequent purchase, so while it may be easier to have an offer with a home sale contingency accepted, it may be harder to complete this type of transaction.
Early in the crisis, sellers showed a willingness and ability to respond to the evolving situation by deciding not to list in the spring, a typically busy time for housing. Many sellers are expected to come back to the market in late-summer when COVID infections are expected to abate enough to permit a resumption in many types of activities, giving buyers options and boosting sales in these months.
John M. Brabham Real Estate Berkshire Hathaway HomeServices is a full-service property management firm with more than 60 years of expertise in every aspect of owning and managing successful rental properties in the Sumter, Shaw Air Force Base Community and surrounding areas. We offer unparalleled service whether you own a large building or an individual unit. We strive to keep costs low to maximize your return. Visit our website or call 803-774-7368 x115.