2020 has been a doozy! Unemployment is rocky and the Coronavirus has really shaken the economy. At the same time, mortgage rates recently hit a historic low and the stock market is soaring.
Historically Low Mortgage Rates
According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage just went down to 3.45%. It was 4.4% a year ago. This represented the third consecutive week with declines in mortgage rates. The low-interest rates have led to an uptick in refinancing applications—for example, according to MBA’s weekly mortgage survey, refinancing activity was up 183% for the year. So what about buying or selling a home?Other factors are affecting the housing market, aside from the general economy and mortgage rates. For example, while Fannie Mae’s Home Purchase Sentiment Index found 59% of respondents say it’s a good time to buy a home, there’s a potential obstacle—historically low inventory. A Realtor.com report found housing inventory is currently at the lowest levels since at lease 2012. West Coast buyers are feeling the inventory squeeze the most—for example, listings in San Jose, California, have gone down more than 37%.
While mortgage rates are good news for buyers and potential sellers as well, what about overall housing affordability?According to CoreLogic’s Home Price Index as of October 2019, U.S. home prices had gone up both year-over-year and month-over-month. There was an increase of 3.5% nationwide from October 2018 to October 2019. CoreLogic, based on current data, estimates that price growth will continue into 2020, potentially going up 5.4% from October 2019 to October 2020. Even with rising prices being seen in many markets around the country, buyers aren’t necessarily going to be deterred. Many older millennials are looking to buy this year, particularly as rents go up. That comes together with factors that could increase inventory, such as more Baby Boomers planning to sell their homes and a potential construction boom that seems to be on the horizon. Also, while home prices are likely to keep going up based on current trajectories, it may slow somewhat in 2020. Currently, Zillow has the median home value in the United States at $244,054, and Zillow predicts that prices will go up 2.8% over the next year. The current median listing price nationwide is $282,000 and the median sales price is $236,900. The median rent price is $1,650. Zillow describes it as a “very hot” real estate market right now. So what does this mean overall? It will be a seller’s market where you can get top dollar for your home this year, with pervasively low inventories and consumer sentiment at all-time highs. As a buyer, you may pay more, but this could be offset by low mortgage rates and the comparatively high rental rates being seen across the country. It’s unlikely based on current data and forecasts that we’re going to see any downturn in the housing market in 2020. The balance between supply and demand may start to even out somewhat in 2020, but it should remain a good time for sellers, with new buyers entering the market. If you’re ready to buy or sell and connect with a top Realtor, reach out to EffectiveAgents.com today.