If one wanted to be really cute about it, they could sum up 2020 real estate predictions in just a handful of words, which would be as follows. Low interest rates, tight inventory of housing stock and the continued digitization of real estate transactions.
According to Sean Hundtofte, chief economist for online mortgage lender Better.com, “In 2020, we’ll continue to see Millennials growing their share of the mortgage market, which in turn, will serve as a catalyst to lenders to continue to rapidly innovate their technology offerings to meet the expectations of an audience more accustomed to an Amazon, Venmo-like experience.” Although Mr. Hundtofte is adapt to point out the importance of technology, he misses the point in thinking that companies orientate their technology to please a certain generational group, when in fact the driver of technology is to optimize a company’s resources for the purposes of pleasing Wall Street expectations, not Android obsessed consumers who are concerned more about their latte’s then other substantive matters in life.
As Daryl Fairweather, chief economist for real estate brokerage Redfin, explains, “Right now we aren’t seeing a ton of new listings. Without more listings coming on the market, there will be more competition starting off in early 2020 and that will lead to more price pressure.” And what this will mean, is that more pressure leads to less inventory moving, which leads to tighter inventory. Great if you’re a homeowner and you’re sitting on top of a ton of equity, not so good if you’re looking to buy a home but get stuck on the sidelines without much to pick from. Always a bridesmaid and never a bride? Not a good place to be if you’re sincerely looking to buy a home and you’re unable to purchase at your preferred price point, and/or you have to compromise on the neighborhood you’d like to live in, but cannot given the lack of movement in the housing market.
This will be real quick. Most economists predict 2020 to hover in the 3.7% to 3.9% range for a 30-year mortgage, while some of the more bullish economists expect the rate to go even lower, perhaps in the 3.5% to 3.6% sub range. That’s at least what the pencil pushing PhD’s at Fannie Mae are saying during their water-cooler breaks in Washington, DC. This is good news for everyone, since lower rates will buy you more house then you could have bought just a year ago – assuming prices haven’t risen as much. If they have, then that means you’re a dollar short, a day late.