5 Housing and Mortgage Trends To Watch in 2020
Home sales are expected to increase and market dynamics will shift as millennial buyers add pressure to existing supply.
The housing market is showing no signs of slowing down in 2020, bolstered by low mortgage rates, a solid economy and strong employment numbers. Looking ahead, it’s expected that home sales will increase, with more millennial buyers adding pressure to existing supply.
If you’re a prospective homebuyer, it’s important to be aware of the factors that are predicted to affect the housing market. Here are five trends to watch for in 2020.
Housing market trend #1: Mortgage interest rates should remain low
Forecasters anticipate that trade tensions will ease and inflation will hold steady, which will help maintain current mortgage rates. Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association predict that mortgage rates will remain under 4% throughout 2020. Because mortgage rates over the last few decades have ranged from 6.29 to 12.70 percent, many homebuyers may not fully realize the opportunities they have right now.
If low mortgage rates hold in 2020, it will help offset price increases and create more buying power for consumers.
Housing market trend #2: Home inventory, especially in Utah and Idaho, will remain tight
Low housing inventory is expected to continue in 2020, making it a seller’s market in most states. Many areas with high in-migration and population growth are down to a 60-day supply. Although new construction is taking place, it is not enough to meet demand and many units aren’t starter homes priced for first-time buyers.
“In Idaho and Utah, it’s become common for listed homes to receive multiple offers — especially for starter homes,” says Mike Gould, Mortgage Division manager for Zions Bancorporation. “Because it’s projected that 1 in 4 offers will face a bidding war this year, it’s important for prospective homebuyers to prepare for a competitive market.”
Housing market trend #3: Home prices will continue to rise
Because of pressures from limited inventory and competitive interest rates, it’s expected that home prices will rise. States with strong in-migration and quality of life are experiencing some of the largest gains. Because of its rapid population growth and booming economy, Boise, Idaho, was ranked as the top market for 2020 by Realtor.com.
These price increases will lead to increased competition and pressure for first-time homebuyers to find affordable options.
Housing market trend #4: Millennials will drive home purchases
According to Transunion, 8.3 million millennials will enter the housing market in the next two years. Although some people perceive Millennials as a generation happy with renting, a survey from Apartment List polled 6,400 millennial renters and revealed that nearly 9 in 10 respondents had goals of home ownership.
Many millennials have waited patiently as they’ve prepared for home ownership. As more millennials enter the market, it will continue to put strain on limited inventory and entry-level homes.
Housing market trend #5: Tight inventory will encourage homebuyers to seek alternatives, such as building or renovating older homes
Because of tight inventory, some prospective homebuyers will choose to build a home instead of competing in a hot market. Although homes that need major repairs have often been passed over from buyers, it’s also predicted that more homebuyers will be open to renovating these properties.
“With the popularity of shows like Fixer Upper, it’s not surprising that attitudes towards home renovations have shifted,” Gould says. “The fear of major home improvement projects has diminished and many prospective homebuyers are open to these options.”
If you’re a prospective homebuyer in 2020, give yourself every possible advantage
If you’re seeking to close on a home this year, you’ll benefit from having a mortgage provider with a streamlined application process. Zions Bank’s Zip Mortgage* allows clients to complete their application in 10-15 minutes and offers a 24-hour automated underwriting system.
If tight inventory has you looking to build rather than buy, consider the Zions Bank One-Time Close Construction Loan*. This loan bundles the lot purchase, construction and permanent loan in one transaction – which means there is only one set of home loan closing costs and loan documents.
To learn more, contact a Zions Bank mortgage loan officer.
*Loans are subject to credit approval. Terms and conditions apply. See a banker for details.
Malcolm Hong is the Public Relations officer for Zions Bank in Idaho.