With a growing economy, low unemployment, and rising wages, the home market is in good shape. The new year is coming up fast, and it’s time to take a look at what the market could hold in the coming months.
Here are five insights that both buyers and sellers will need to consider when engaging with the home market next year.
Existing Homeowners Will Be Less Likely to Sell
American homeowners are holding their homes for longer. According to industry data, the average homeowner has lived in their home for 13 years, compared to 8 years when data was collected in 2010.
This means that there will be less inventory on the home market, which could make it more difficult for budget-buyers to purchase a first or move-up home.
Affordable Homes Will Become Scarce
Homes in the range of $150,000 to $400,000 can’t keep up with demand. This makes the market more competitive for first time buyers. On the flip side, it means that anyone selling a home in this range next year could find it easier to connect with a buyer.
Mid and High End Sellers Will See the Most activity
Sellers with homes valued above $400,000 will see more activity. Supply roughly equals demand when looking at the mid range of the market. This can make the process of selling a home easier, although offers may not be as competitive.
Mortgage Rates Will Remain Low
Low mortgage rates will continue, thanks largely to mild economic growth and a low Federal Reserve interest rate. This will benefit both sides of the home market. There will be more buyer interest as mortgages will remain affordable. This could prevent inventory stagnation, helping the sellers that plan to move on in 2020.
FHA Loans Could Become More Competitive
Big banks pulled back from FHA loans in recent years, with smaller nonbank lenders filling in the gaps. With the department of Housing and Urban Development now promising to make the regulatory environment less complex for all lenders, we are likely to see competition between banks and smaller financial institutions. This is good news for buyers, who will be able to shop around for loans with better terms and perks.
Due to low inventory, the market will belong to the sellers in 2020. Even so, there are still factors that will be favorable for buyers. Anyone considering selling or buying a home next year will find conditions to be as good, if not slightly better than 2019.
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