Interest rates remain low, which will help keep demand high for new mortgages and buyers interested in moving to new digs. In combination with a shortage of new housing in many markets, these factors could lead to overall price growth for the year.
Lower cost cities = higher growth markets
Rising housing costs, especially in already expensive coastal cities (looking at you New York and California), may create shifts in relocation trends including flight to cheaper cities. For example, at Sundae we’ve worked with a number of customers in California who’ve sold their house and moved to more affordable cities in the midwest and south.
New ways of completing old transactions
A potential consequence of higher housing costs is that while sellers may be able to ask more for their homes, they’re likely to get fewer offers in total due to more buyers being priced out of the market. This could lead to longer listing times and increased stress for those who go the traditional route of marketing their homes on the MLS.
For example, off-market selling will become a more common approach for many homeowners who are seeking convenience and speed in completing a transaction. This divide between established and emerging ways of selling may drive real estate agencies to either push back on or partner with large home investment companies who are driving changes in the market.
Boomers are downsizing
Another big change related to demographics is the growing trend in downsizing. As the Baby Boomer generation ages, we expect the number of households looking to downsize to increase next year and in the coming years. According to a recent article in the Wall Street Journal, boomers are preparing to sell approximately one-quarter of America’s homes over the next two decades.
The last word
Barring other macroeconomic events, we expect the housing market to remain stable in 2020 overall. But as always in the real estate business, local and regional factors are what cause the biggest shifts between boom and bust, so be sure to do the research on what’s going on in your market as you embark upon your real estate journey.