The new year brings with it a number of big events—a presidential election and talks of a possible recession, to name a few—and that means predicting the real estate market is a bit challenging. What the experts have to say might surprise you.
Here are some interesting 2020 real estate projections.
Mortgage Rates Will Stay Stable
Experts at the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac predict relatively stable mortgage rates throughout 2020. Freddie Mac and NAR forecast slightly higher rates of 3.8%, while Fannie Mae suggests numbers could drop as low as 3.5%.
Just a note: These rates are pretty incredible, especially when compared to rates over the past few decades. For example, the 1970s saw rates around 8.86%, while in the 80s, rates soared to over 12%.
Home Sales Will Increase
Of the four expert groups mentioned above, three predict that home sales in 2020 will increase compared to 2020, while Freddie Mac calls for consistent sales. Since mortgage rates are expected to stay low, buyer demand will also remain stable or even increase, driving home sales in the new year.
Home Values Will Increase
All four expert groups (plus two more) agree: home values in 2020 will continue to grow, though there’s a bit of variation in how much those values will grow. MBA predicts only a 3.1% increase, while CoreLogic calls for as much as a 5.4% increase in values. Closer to the middle, Fannie Mae suggests a 4.1% climb.
What About a Recession?
The big question on many buyers’ minds: Is a recession possible in 2020? The answer is of course that we can’t be sure. In early 2019, a large percentage of economists predicted a recession in 2020, but the economy has remained strong heading into 2020, so many are starting to rethink this forecast. In fact, Goldman Sachs anticipates only a 20% probability of a recession over the next year.
The Bottom Line: 2020 Real Estate Looks Promising
Whether you’re thinking of buying or selling a home in 2020, projections seem to be in your favor! For buyers, mortgage rates are historically low, which means increased affordability—even as prices climb. And rising home values are good for both buyers and sellers in terms of equity.