According to Forbes, today’s mortgage rates — at about 3.75 percent — will stay low in 2020. At the same time, market watchers expect home prices to continue to escalate due to low inventory and high demand.
Without more listings on the market, competition will increase early in the year. Entry-level home prices will rise higher than incomes. Low-interest rates and the lack of starter homes will continue to raise prices.
Housing inventory will remain soft through most of the year. As one real estate agent remarked, “You can’t buy what’s not for sale.”
According to the National Association of Home Builders, new construction in late 2019 reached a 20-month high. Even so, months may be needed before building can sustain demand.
Realtor.com reveals Millennials constituted almost half — 46 percent — of mortgage originations in September 2019, up from 43 percent in 2018. At the same time, Baby Boomer and Gen X mortgage activity faded.
If today’s older adults (born between 1931 and 1959) behaved like previous generations, more than 1.6 million homes would have been on the market in 2019.
But Boomers are staying in their homes, not downsizing as did previous generations. One factor: Older people are working longer. Another factor is that young people are staying at home longer. In 2016, 16.1 percent of senior households had younger generations living with them, up from 14.4 percent in 2005, according to Trulia and Census figures.
As for homeowners, should they sell in 2020? According to the Federal Reserve, household equity in real estate has more than doubled since its shortage in 2012. Mortgage equity is at an all-time high
Homeowners with the flexibility to move in the next few years may be assuming that when they’re ready, the market will be as inviting as it is today. This is not necessarily true, and some vital housing-market drivers suggest 2020 could be a sweet spot for selling a home.
Mortgage interest rates are low. Potential buyers track them carefully. That’s a pleasant tailwind for buyers interested in a homeowners’ property,
Has the time come to book their profits and move on?
Only the homeowner knows.
