Three trends to watch in the 2020 real estate market

buying a home
(© Andy Dean –

By nature, trends are dynamic. Some changes are subtle, while others are industry-shaping. Still, it’s worth keeping up with all those changes and trends in the real estate market to grab the appealing offers. The real estate in Miami, San Francisco, Portland, has seen the inflow of investment as the wealthy try to flee from high taxes. This is due to the new rent control regulations that have caused rent hikes in a few markets including California, New York, and Oregon.

Yet, the true high-performers of the US real estate market are second-tier cities. Investments in properties located in cities like Austin, Atlanta, Boston, and Phoenix have increased significantly. These mid-sized markets are expected to enjoy the population growth in 2020.

What else will this year bring? What sentiments will we observe across the real estate industry? What mortgage rates will be charged? And how will building companies address inventory pressure? Let’s find out what to watch out for in the housing market this year.

Reasonable interest rates

Most housing experts and economists forecast that mortgage rates will be at 4% this year. This comparatively low threshold has remained relevant since the summer of 2019. Financial analysts anticipate that the rates will remain rather low. This may ease home purchasing and present sufficient refinancing opportunities. In July 2019, home sales saw an increase of 2.5%. If the rates stay low as it’s projected, the market will likely see a boom.

Reasonably low rates are great news not only for homebuyers but for renters as well. Since more people can afford to purchase a home, the rental market will see the decreasing competition.

There are no guarantees, however, that the rates will stay fixed. Even more, the news has the power to impact rates. Yet, the Federal Reserve’s sentiment also indicates that the mortgage rates will be reasonably low. In view of the improved US economy and the unemployment stats hovering at a 50-year low, the central bank is unlikely to push up rates. Low inflation will also keep the rates where they are.

While stable low-level interest rates may improve home sales generally, they may also cause a slight increase in home prices.

Homebuilders fill the gap

The housing market failed to satisfy the growing demand for affordable homes in the previous year. Because of the shortage of existing entry-level houses for sale, customers are anticipating the newly constructed houses.

One of the key reasons is Baby Boomers holding a substantial number of 1.6 million homes off the market. They select to stay in their homes, which contributes to the inventory shortage. And those of the aging generation, who want to downsize, prompt building activity.

Meanwhile, Millenials who were born between the 1980s and 2000s are getting stable jobs, starting families, and seeking to acquire their own homes. Young people make up a greater part of home buyers accounting for 37%. Many millennials intend to purchase houses, but they face the deficiency of inventory.

The experts project the builders to offset that deficit in 2020. There are already some improvements seen in the market for first-time buyers.

As follows from the report, homebuilder confidence has soared to the highest point in 20 months. The increased construction is a result of low mortgage rates and enhanced economic conditions that are fueling the purchasing demand.

Homebuilders increasingly focus on providing entry-level homes to meet millennials’ demands. Properties with plenty of usable space located in bustling cities with a more affordable cost of living are some of the preferred options among the young people. Millennials are the generation known for conducting online research before deciding on the home purchase. Leveraging the Internet, as well as other modern technologies that simplify the buy/sell process, becomes a necessity.

Tech remodels real estate

The wave of tech integration has ‘overwhelmed’ the real estate industry too. The sector will likely go on adopting technologies like web and mobile home-selling platforms, data visualization services, smart homes, artificial intelligence tools, etc.

The growing number of both large and small lenders implement paper-free technologies to improve efficiency. AI and ML allow reducing the time spent on data analysis and documentation processes. Smart leasing assistants ensure 24/7 presence to respond to the queries of potential customers. This results in optimized leasing flow and enhanced customer experience.

The real estate marks the growing integration of iBuyers. These are real estate companies or investors that use an automated valuation model and other technologies to assess homes fast even without seeing them. The platforms offering such services help to buy and sell property in a seamless way. Consumer direct lending will assist agencies in connecting with potential buyers earlier in the process.

AR and VR tours will become part of home buying and leasing activities. Since technology allows showcasing properties via simulated tours, real estate brokers get the opportunity to enter the international markets. At the same time, adoption of modern-day technologies by the industry players will cater to the generation of tech-savvies — millennials. The largest cohort of home buyers so far.

Drawing a line

Generally, those seeking to purchase a house can expect the residential property market to demonstrate stability this year. The economists, central bank, and builders have validated this trend.

The supply of new houses will offset the inventory pressure. In combination with pretty low interest rates and flattened home prices, the housing market will offer great buying opportunities. Sellers will take a well-considered approach to pricing. Especially, it is true for entry-level home sellers who will see tough competition in the market.

The new decade will bring a more digital experience with iBuyers being the main trend. To remain competitive in the housing market real estate companies will have to invest in advanced tech.

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