Currently, the United States is in the midst of the longest period of economic expansion in history, many economists believe that this isn’t likely to hold on much longer. Most economists predict a recession in 2020 or possibly even sooner at the end of 2019, so what would that mean for the real estate market?
Is An Economic Slowdown On The Horizon?
Analysts don’t believe housing will be the cause of the next recession, unlike the last one. Even so, that doesn’t mean the housing market will be immune to a possible economic slowdown. During a recent panel bringing together 100 economists and housing experts, 51% of participants said they expect home buying will decline in 2020. Only 17% predict home buying will increase next year.
Of the panelists, 73% said they believe the demand for home buying will be either the same or lower than it was last year.
The panel experts feel largely that the housing market is currently correcting itself, which is why they don’t believe it will be the primary contributing factor to the next recession. There is a minor real estate slowdown occurring in many markets right now.
Along with general economic factors, mortgage rates are continuing to prove significant in the real estate market and are shaping many buying and selling trends. Home buyers are still seeing very attractive mortgage rates and this is providing support for the market.
Is It A Buyer’s or Seller’s Market?
According to Ralph McLaughlin, who serves as deputy chief economist for CoreLogic, a property data firm, we’re in a seller’s market right now. He predicts that home buyers shouldn’t be too upset, though. Ralph sees the second half of 2019 as having been a good opportunity for first-time buyers. He suggests this is the case because the market trends indicate it’s a good time to do a thoughtful, thorough home search and really take your time. There’s a good sense of balance right now for buyers, so they don’t have to feel rushed, or like they need to jump out of the search altogether.
Millennials and The Market
Millennials are likely to be the main drivers of the home-buying market. Millennial’s are at a key time in their lives and careers where they’re ready to transition into ownership. According to the National Association of Realtors® (NAR), Millennial’s accounted for 37% of all buyers last year, and 20% of sellers. Since 2017, this demographic has accounted for the majority of all mortgage originations.
How Does Inventory Look?
According to Trulia data, inventory is on the rise for both starter homes and what are described as “trade-up” properties, but not enough to keep up with demand. These types of properties are increasing in price as a result. Supply is especially restricted at lower price points.
Finally, housing prices have been increasing since 2012, but that seems like it’s starting to slow somewhat. In March of this year, housing prices were up only 3.7% from the year before. This is making home-buying more affordable for more people, and buyers see a lot of advantages from mortgage rates being lower than expected.
What does all this mean? It means that it’s not fully a buyer or seller’s market, and this sense of balance will likely carry into 2020. As a buyer or a seller, the best option is to choose a top-selling realtor® to help you navigate the market.
Find the perfect realtor® through EffectiveAgents® to maximize your home buying or selling experience.