1. Mortgage rates remain favorable.
Mortgage rates currently sit at 3.75% according to Freddie Mac’s most recent numbers and there seems to be a consensus by those in the lending arena, including Freddie Mac and MBA that rates will remain low next year—likely somewhere between 3.7% and 3.9%. Fannie Mae predicted even lower rates—between 3.5% and 3.6% over the course of 2020.
2. Home sales prices will keep increasing-albeit slowly.
Home prices will continue their climb upward due to tight inventory and high demand. According to CoreLogic, home prices should increase by 5.6% by next September and starter home prices will increase even more than incomes next year.
3. Inventory will remain tight.
Housing inventory is going to remain limited for much of 2020, exacerbated by interest rates and record-high homeownership tenures, with the average homeowner staying in their home 13 years, up from 8 years in 2010. An increase in construction may provide some relief relative to the tight inventory.
4. Millennials continue to dominate the home-buying marketplace.
Millennials, who made up 46% of all mortgage originations this past September, will keep up their home buying streak, while Baby Boomers hold up inventory. Millennials rank homeownership as one of their top goals in life—higher than marrying or having kids. They tend to look toward more affordable places to put down roots in what is being termed “Hipsturbia” communities-—live-work-play neighborhoods that blend the safety and affordability of the suburbs with the transit, walkability and 24-hour amenities of big cities. The Urban Land Institute recently named Hipsturbia as one of its top real estate trends to watch in 2020.
5. The industry will continue to digitize.
Electronic and remote notary closings will start becoming the trend in real estate transactions. In recent years, the mortgage and real estate arenas started moving away from their manual, paper-laden processes, and 2020 will only see that trend expand further, in an effort to fully digitize the entire real estate sale, purchase and mortgage processes. In addition, we may see more companies combining technologies across the board, from startups partnering with startups to startups partnering with long existing businesses to accomplish the full extent of digitization.