SANTA CLARA, Calif.,
Dec. 4, 2019 /PRNewswire/ -- At
a time when millennials are reaching key life milestones, the U.S.
housing market will continue to slow in 2020 as inventory reaches
historic lows and economic uncertainty prompts consumers to pull
back on their spending, according to the
realtor.com® 2020 housing forecast released
today.
The forecast predicts that despite some relief from new
construction, moderating home prices and relatively low interest
rates, first-time buyers will continue to struggle with
affordability. Sellers will contend with flattening price growth
and slowing activity. These trends will drive existing home sales
down 1.8 percent to 5.23 million.
Highlights of the realtor.com® 2020
forecast include:
- Home prices will flatten, increasing just 0.8 percent
nationwide. Prices will decline in more than 25 percent of the
100 largest metros, including Chicago, Dallas, Las
Vegas, Miami and
San Francisco.
- Inventory shortages will prevail and could reach historic lows,
especially the entry-level category.
- Mortgage rates will remain reasonable, averaging 3.85 percent
throughout the year.
- Affordability will remain a key driver for buyers, benefitting
mid-sized markets.
- Millennials – with the oldest members approaching 40 and the
biggest cohort turning 30 in 2020 – will surpass 50 percent of all
home purchase mortgages.
- With little incentive to sell, baby boomers will continue to
hold onto their homes, while Gen X is more likely to upsize,
freeing up some entry level inventory.
"Housing remains a solid foundation for the U.S. economy going
into 2020," said George Ratiu,
senior economist at realtor.com®. "Although
economic output is expected to soften – influenced by clouds of
uncertainty in the global outlook, business investment and trade –
real estate fundamentals remain entangled in a lattice of
continuing demand, tight supply and disciplined financial
underwriting. Accordingly, 2020 will prove to be the most
challenging year for buyers, not because of what they can afford,
but rather what they can find."
What will 2020 be like for buyers?
Buying a home in
2020 will be a mixed bag. It will offer more opportunities for some
as the supply of new homes begins to offset inventory pressure that
has built over the last four years, interest rates remain
reasonable and home prices flatten. The broad price moderation will
continue to make mid-sized markets in the Midwest and South
attractive. However, the construction of new homes in 2019 was
largely isolated to upper-tier of housing and that is unlikely to
ease conditions for first-time homebuyers. Additionally, while
qualifying for a mortgage could be easier on paper due to
stabilizing prices and a still relatively low rate environment, the
total number of homes available for sale will hit a record low.
What will 2020 be like for sellers?
Sellers in 2020
will grapple with dormant price growth and slowing activity, which
will require a greater level of patience and a thoughtful approach
to pricing. Entry-level home sellers can expect steady competition
for their homes, which will keep prices firm. Upper-tier housing is
expected to be softer as properties will likely sit on the market
longer, requiring greater incentives to close deals. As the market
moves toward a more balanced scenario, sellers who adjust to local
market conditions can expect to benefit from continuing demand.
Forecasted key 2020 housing trends
- Millennials expand their domination of the market – Demand from
those born between 1981-1997 will reach new highs in 2020 with
millennials accounting for more than 50 percent of all mortgages by
the spring. Several factors are at play here. In 2020, the largest
cohort of millennials – 4.8 million of them – will turn 30, a time
when many purchase their first home, while the oldest members of
the generation will reach 39, often a point when many look to move
from the city to the suburbs for family-friendly amenities. The
largest generation in history will consolidate their top spot in
mortgage originations and effectively outnumber Gen X and baby
boomers combined in their share of purchases.
- Growing economic uncertainty – Although a recession isn't
likely in 2020, the economy will show signs of softening. The
pullback in business spending is expected to lead to a slowdown in
consumer spending. Housing remains the largest single consumer
expense, making home-buying activity a major contributor to the
U.S. economy and a bellwether for economic expectations. Rising
uncertainty about the economic outlook will dampen consumer
enthusiasm about spending, leading to a decline in sales and an
increase in homeowners' tenure.
- Low inventory – Despite increases in new construction, next
year will once again fail to bring a solution to the inventory
shortage that has plagued the housing market since 2015. Inventory
could reach a historic low as a steady flow of demand, especially
for entry level homes, and declining seller sentiment combine to
keep a lid on sales transactions. With housing prices expected to
stabilize and concern over economic uncertainty, there will be
little incentive for baby boomers to sell in the coming year. The
younger Gen X is more likely to upsize and free up entry level
homes, but not fast enough to ease inventory woes.
- Affordability brings secondary markets to the center stage – As
buyers are priced out of suburban environments near large
metropolitan areas, they will begin searching for family-friendly
lifestyles in other metros or across state lines. Cities in
Arizona, Nevada and Texas will continue to benefit from shoppers
looking for more affordable alternatives to California. Meanwhile, home seekers from
expensive Northeast markets will find the warmer options in the
Carolinas, Georgia and
Florida attractive. Midwest
markets will become more attractive, as buyers will find the
affordable housing and solid, diversified economies of Ohio, Indiana
and Kansas compelling.
- Election will be 2020 wild card – Along with the presidential
election, there will be candidates running for 35 of the 100 seats
in the U.S. Senate, along with 435 seats in the House of
Representatives. The 2020 elections will be closely watched by
consumers and businesses for indications of potential changes.
Although the outcome of the presidential election is not directly
tied to the performance of the housing market, business optimism
and investments, along with consumer confidence and spending do
influence economic output, and can also influence housing activity.
Looking at housing trends over the past three decades, the pace of
sales, price and inventory are intertwined with economic
performance – employment, wages, and interest rates.
Realtor.com® 2020 Housing Market
Forecast
Mortgage
Rates
|
Up to 3.88% by year
end
|
Existing Home
Median Price Appreciation
|
+0.8%
|
Existing Home
Sales
|
-1.8%
|
Single-Family Home
Housing Starts
|
Up 6%
|
Homeownership
Rate
|
64.6%
|
Sale and Price Forecast for 100 Largest Markets
Area
|
Sales
|
Price
|
United
States
|
-1.8%
|
0.8%
|
Akron,
Ohio
|
2.6%
|
0.0%
|
Albany-Schenectady-Troy, N.Y.
|
-0.5%
|
2.3%
|
Albuquerque,
N.M.
|
-0.2%
|
0.9%
|
Allentown-Bethlehem-Easton, Penn.-N.J.
|
2.3%
|
0.4%
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
-3.5%
|
4.5%
|
Augusta-Richmond
County, Ga.-S.C.
|
-4.2%
|
2.1%
|
Austin-Round Rock,
Texas
|
-2.8%
|
-0.2%
|
Bakersfield,
Calif.
|
-0.3%
|
-1.4%
|
Baltimore-Columbia-
Towson,
M.D.
|
-0.1%
|
-0.3%
|
Baton Rouge,
La.
|
-1.6%
|
0.4%
|
Birmingham-Hoover,
Ala.
|
-1.3%
|
-1.1%
|
Boise City,
Idaho
|
0.3%
|
8.1%
|
Boston-Cambridge-Newton, Mass.-N.H.
|
-2.1%
|
1.2%
|
Bridgeport-Stamford-
Norwalk,
Conn.
|
-4.1%
|
4.8%
|
Buffalo-Cheektowaga-
Niagara Falls,
N.Y.
|
2.6%
|
-2.2%
|
Cape Coral-Fort
Myers, Fla.
|
0.0%
|
2.6%
|
Charleston-North
Charleston, S.C.
|
1.2%
|
1.9%
|
Charlotte-Concord-
Gastonia,
N.C.-S.C.
|
0.4%
|
0.1%
|
Chattanooga,
Tenn.-Ga.
|
2.0%
|
3.6%
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
-0.9%
|
-0.3%
|
Cincinnati,
Ohio-Ky.-Ind.
|
1.3%
|
0.3%
|
Cleveland-Elyria,
Ohio
|
2.6%
|
0.4%
|
Colorado Springs,
Colo.
|
-1.4%
|
6.3%
|
Columbia,
S.C.
|
5.5%
|
-0.2%
|
Columbus,
Ohio
|
-2.0%
|
1.7%
|
Dallas-Fort
Worth-Arlington, Texas
|
-4.9%
|
-0.5%
|
Dayton,
Ohio
|
0.6%
|
-0.2%
|
Deltona-Daytona
Beach-Ormond Beach, Fla.
|
1.1%
|
0.2%
|
Denver-Aurora-Lakewood, Colo.
|
-2.3%
|
1.7%
|
Des Moines-West Des
Moines, Iowa
|
-10.5%
|
0.4%
|
Detroit-Warren-Dearborn, Mich.
|
-4.1%
|
-1.0%
|
Durham-Chapel Hill,
N.C.
|
-0.9%
|
1.2%
|
El Paso,
Texas
|
0.9%
|
0.6%
|
Fresno,
Calif.
|
-0.7%
|
-0.9%
|
Grand Rapids-Wyoming,
Mich.
|
-4.2%
|
0.2%
|
Greensboro-High
Point, N.C.
|
0.8%
|
-2.9%
|
Greenville-Anderson-
Mauldin,
S.C.
|
-2.5%
|
0.1%
|
Harrisburg-Carlisle,
Penn.
|
0.3%
|
0.5%
|
Hartford-West
Hartford-East Hartford, Conn.
|
-3.0%
|
2.7%
|
Houston-The
Woodlands-
Sugar Land,
Texas
|
0.3%
|
0.2%
|
Indianapolis-Carmel-
Anderson,
Ind.
|
0.0%
|
1.1%
|
Jackson,
Miss.
|
-2.1%
|
-0.1%
|
Jacksonville,
Fla.
|
-2.3%
|
0.7%
|
Kansas City,
Mo.-Kan.
|
3.4%
|
-4.0%
|
Knoxville,
Tenn.
|
1.6%
|
1.3%
|
Lakeland-Winter
Haven, Fla.
|
-0.9%
|
0.2%
|
Las Vegas-
Henderson-Paradise,
Nev.
|
-9.5%
|
-1.1%
|
Little Rock-North
Little Rock-Conway, Ark.
|
-2.6%
|
1.0%
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
-6.0%
|
0.7%
|
Louisville/Jefferson
County, Ky.-Ind.
|
-0.8%
|
0.9%
|
Madison,
Wis.
|
-1.3%
|
1.9%
|
McAllen-Edinburg-Mission, Texas
|
4.4%
|
4.0%
|
Memphis,
Tenn.-Miss.-Ark.
|
0.1%
|
3.0%
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
-1.1%
|
-1.2%
|
Milwaukee-Waukesha-West Allis, Wis.
|
-3.6%
|
2.1%
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
-2.4%
|
2.8%
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
-1.2%
|
0.4%
|
New Haven-Milford,
Conn.
|
5.0%
|
-2.4%
|
New Orleans-Metairie,
La.
|
-2.3%
|
-0.7%
|
New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
-4.1%
|
0.7%
|
North
Port-Sarasota-Bradenton, Fla.
|
1.6%
|
0.5%
|
Oklahoma City,
Okla.
|
-1.4%
|
-0.8%
|
Omaha-Council Bluffs,
Neb.-Iowa
|
-3.0%
|
0.7%
|
Orlando-Kissimmee-Sanford, Fla.
|
0.9%
|
1.8%
|
Oxnard-Thousand
Oaks-Ventura, Calif.
|
-6.0%
|
0.1%
|
Palm
Bay-Melbourne-Titusville, Fla.
|
-9.8%
|
0.2%
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
-3.9%
|
0.8%
|
Phoenix-Mesa-Scottsdale, Ariz.
|
-0.4%
|
3.4%
|
Pittsburgh,
Pa.
|
-0.6%
|
1.3%
|
Portland-South
Portland, Maine
|
1.4%
|
1.2%
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
-3.0%
|
0.5%
|
Providence-Warwick,
R.I.-Mass.
|
-2.1%
|
0.2%
|
Raleigh,
N.C.
|
0.2%
|
2.2%
|
Richmond,
Va.
|
-7.7%
|
0.6%
|
Riverside-San
Bernardino-Ontario, Calif.
|
-7.6%
|
1.5%
|
Rochester,
N.Y.
|
4.7%
|
0.4%
|
Sacramento-Roseville-
Arden-Arcade,
Calif.
|
-6.1%
|
0.8%
|
Salt Lake City,
Utah
|
-0.5%
|
3.5%
|
San Antonio-New
Braunfels, Texas
|
-1.9%
|
0.8%
|
San Diego-Carlsbad,
Calif.
|
-3.2%
|
0.2%
|
San
Francisco-Oakland-
Hayward,
Calif.
|
-4.5%
|
-0.4%
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
-3.0%
|
2.1%
|
Scranton-Wilkes-Barre-Hazleton, Penn.
|
-2.7%
|
-3.2%
|
Seattle-Tacoma-Bellevue, Wash.
|
-0.8%
|
3.1%
|
Spokane-Spokane
Valley, Wash.
|
1.5%
|
1.3%
|
Springfield,
Mass.
|
0.3%
|
1.1%
|
St. Louis,
Mo.-Ill.
|
-1.2%
|
-0.6%
|
Stockton-Lodi,
Calif.
|
0.7%
|
-0.5%
|
Syracuse,
N.Y.
|
-1.4%
|
0.6%
|
Tampa-St.
Petersburg-
Clearwater,
Fla.
|
0.6%
|
1.6%
|
Toledo,
Ohio
|
0.5%
|
-0.1%
|
Tucson,
Ariz.
|
3.4%
|
3.3%
|
Tulsa,
Okla.
|
1.0%
|
-2.3%
|
Urban Honolulu,
Hawaii
|
3.6%
|
-0.9%
|
Virginia
Beach-
Norfolk-Newport News,
Va.-N.C.
|
-3.8%
|
1.1%
|
Washington-Arlington-
Alexandria,
D.C.-Va.-Md.-W.V.
|
-1.5%
|
2.6%
|
Wichita,
Kan.
|
-0.5%
|
1.1%
|
Winston-Salem,
N.C.
|
3.6%
|
0.5%
|
Worcester,
Mass.-Conn.
|
-0.4%
|
-0.6%
|
Youngstown-Warren-
Boardman,
Ohio-Penn.
|
-0.4%
|
2.1%
|
About realtor.com®
Realtor.com®,
The Home of Home Search℠, offers the most MLS-listed for-sale
listings among national real estate portals, and access to
information, tools and professional expertise that help people move
confidently through every step of their home journey. Through its
Opcity platform, realtor.com® uses data science and
machine learning to connect consumers with a real estate
professional based on their specific buying and selling needs.
Realtor.com® pioneered the world of digital real estate
20 years ago, and today is a trusted resource for home buyers,
sellers and dreamers by making all things home simple, efficient
and enjoyable. Realtor.com® is operated by News Corp
[Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a
perpetual license from the National Association of
REALTORS®. For more information, visit
realtor.com®.
Media Contacts:
- Cody
Horvat - cody.horvat@move.com
- Janice McDill -
janice.mcdill@move.com
View original content to download
multimedia:http://www.prnewswire.com/news-releases/home-sellers-will-remain-on-the-sidelines-in-2020-300968877.html
SOURCE realtor.com