The U.S. housing market last year has had quite a run. Median home prices rose to $316,000 all the way – a record high! Will this one deliver more of the same? In the present economic situation, how will the housing market play out?
Either you sell, purchase or stay put, here are the real estate trends you need to know for this year!
Real Estate Trend #1: Home Prices Still Gradually On the Rise
All right, let’s just continue with home prices. Overall, house prices in 2019 (3.3 percent) rose slower than in 2018 (5 percent). And this year, it seems, it won’t be any different. In reality, real estate gurus expect home prices will only increase by 2.8 percent in 2020. So, you’ll certainly see house prices continue to rise, but they’re not going to knock off your socks with dramatic growth as we’ve seen in previous years.
What Higher Prices Mean to Sellers
That could be a good benefit on the horizon! But bear in mind as well that a lot of buyers are currently being priced out of the market, which may lead to less offers for your house. So, what do you have to do with it? Be aware of the rivalry. You want your home to really stand out from similar ones in your neighborhood, with less offers to go around. Prepare your house for prospective home buyers, and work with a real estate agent to help list the best price for your home.
And be certain you will wait for the right bid. Some buyers may try to knock you down with a low number. If you’re not in a rush to move, wait for an deal that will give you the most profit. When bargaining, remember, the less desperate person still has the upper hand!
What Higher Prices Mean for Buyers
Within this competitive market, if you are going to buy a home, you really have to figure out how much house you can really afford. Crunch the numbers and work out a monthly payment which your budget can accommodate.
Commit to remaining within the amount of the budget. Don’t hurry into a home buy that makes no financial sense to you, no matter how much pressure you feel when you watch rivals pluck good homes off the market. You could dry up your finances!
If you can’t put at least 10 percent down on a traditional 15-year fixed-rate loan, then you probably won’t be able to buy a house on this market. A down payment of less than 10 percent could strangle the budget with huge monthly payments on mortgages. But if you want to get ready to buy and stick to your budget, here are a few choices to consider:
- Keep on saving. Around this time next year, if you remain optimistic and inspired, you can save for a five-figure down payment.
- Sacrifice some requirements of yours. If you can’t afford to buy the house you want, be prepared to give up some “nice-to-have” for your “must-have.” Find the cheapest home in the best neighborhood you can afford, and you can improve it as your income and savings grow over time.
- Expand your quest. What if the place you want to buy is what’s busting your budget? You may be shocked to find the gem in a less popular neighbourhood. The best way to find a home that fits your budget and lifestyle is to work with a real estate agent who really knows the area.
Real Estate Trend #2: Mortgage Interest Rates Are on the Decline (for Now)
In 2019, mortgage interest rates dropped consistently below 4% for a common types of loans. In 2020, economist geeks think interest rates will stay at about 3.7% for a 30-year mortgage and 3.2% for a 15-year mortgage (the only form of mortgage we recommend).
But that is never a certainty because issues like tariffs and trade wars could gradually change the economy, which could push the Federal Reserve to slowly increase interest rates to balance things out.
What Lower Rates Mean for Sellers
If interest rates stay small, buyers would have a greater incentive to buy your home sooner than later. But if interest rates begin to rise later in the year, simply prepare a little longer for your house to be on the market. A mortgage is a major undertaking and introducing higher interest rates to the mix would slow many buyers.
An experienced real estate agent will help you set expectations for how much you can make, and how long you’ll have to wait for the right bid.
What Lower Rates Mean for Buyers
While interest rates are relatively small, be smart and go for a traditional 15-year fixed-rate mortgage if you aren’t buying with cash. This way, you know exactly what your cost is going to be over the lending period.
Real Estate Trend #3: The Majority of Home Buyers Are Still Millennials
That’s right, our biggest phenomenon revolves around who buys houses. And once again, millennials took the lead as last year’s largest group of home buyers (37 percent). What exactly is a millennial? Well, one born between 1980 and 1998 is the nerdy response. The best way to spot a millennial buyer? They can’t wait to share a photo on Instagram of their new home!
What Millennial Purchasers Mean to Sellers
Here are three main words: Understanding your customer. Millennials are, in a nutshell, Internet savvy and do their homework before shopping at home. Here are a few hints:
- Upgrade your online listing. Virtually all millennials (98 percent) use the internet to look for their house — and last year, more than 80 percent found their house on a mobile device. So, on the internet you must make the best possible impression. Make sure you invest in high quality photo listing, and consider taking video footage to give them a digital tour of your home for extra measure.
- Highlighting perks by scale. Yeah, square footage is important. Yet millennials are more concerned about their commuting costs and how close schools are to their new home. In reality, most millennial buyers said that when deciding which home to purchase, they were less likely to compromise on school and neighborhood quality. So, highlight the advantages of the wonderful location of your house, rather than spending time trying to sell on its size.
- Know the popular features. Here are some of the top home features Millennials want: laundry room (86 percent), hardwood front exterior (81 percent), patio (81 percent), garage storage (80 percent), and a walk-in pantry (79 percent).9 If you’re thinking about making any improvements to your house, choosing one of those could have millennials showering you with offers when you’re ready to sell.
What Millennial Buyers Mean for Buyers
Okay, if you’re in the suburbs looking for a three-bedroom, single-family house, expect to have a lot of competition. You may need to reprioritize what you want when shopping for your cozy homw. Follow these tips:
- Know what you want. Decide what you need in a home. If you’re married and house hunting, you need to compromise with your partner on the must-haves. Compare your separate lists, and merge them to use as the basis of your home quest for your real estate agent.
- Write an email. Sending your seller a personal story could just be the thing that makes you stand out from similar offers. When they made an offer on their house, Nashville couple Abby and John had a personal letter included. Abby highlighted that the best thing you can do is to include stuff you love about the house in your message. Tell them how you envision using the space whether they have a deck or screened-in porch. They did so and within 24 hours the sellers approved their bid, even though there were several offers.
- Hire a pro with experience. Nearly 90 percent of millennial home buyers used real estate agents to purchase their homes last year. Think they’re on something? You’re right! Save the hassle of having to buy it yourself. Get the support of a real estate professional so the process of home buying is smooth for everyone concerned.
What If I’m Not Buying or Selling a Home This Year?
You might think, all this is wonderful, but I won’t go anywhere soon. We hear you and for now, here’s what you should know.
1. Equity is unlikely to decline this year.
With most housing markets at low risk of decline, last year’s Housing and Mortgage Market Review predicted home prices will continue to increase over the next few years. If you’re selling your home before 2022, you’ll still make a good profit. Continue to track how much your home is worth and ensure that your equity (balance between the worth of your house and how much you owe on it) is going up.
2. The real estate market isn’t going to crash, from what we can see.
With the slowing price increases, some folks wonder if the housing market will crash again. Well, it’s difficult to say for sure, but there are a range of variables that suggest a housing crisis is unlikely — as long as tariffs and trade wars don’t cause a drastic ripple. Yet analysts agree that we seem to be in good shape as people invest money and new work prospects start to pop up.
3. Buyers are curious, no matter what the neighbourhood.
Considering that home prices have had experienced unprecedented growth over the past couple of years, certain buyers may have less preference. In addition, some may be willing to accept communities that don’t have easy access to highways, or are not close to a major city. If you think you’re living in an undesirable neighborhood or feel that what buyers are looking for is not your home, think again. Now might be the best time for selling.
Take Control of the Trends With a Top-Notch Real Estate Agent
If you want to sell or purchase, you can take advantage of the latest trends by working in collaboration with a professional real estate agent.