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3 Early Positive Signs for the 2020 Housing Market

Many brokers, agents, and other real estate experts know the market is changing. They started to sense it towards the beginning of 2019, but others were a bit surprised as they expected a bigger swing in the market throughout the year.

It’s not hard to find a negative article about the 2020 real estate market, but it’s also pretty common for the pessimists to come out towards the end of the year. While there’s plenty of doom and gloom out there, especially from those trying to gain viewers online from fear, there are several positive signs for the 2020 housing market.

Let’s look a bit closer at three of the early positive signs for the 2020 housing market.

Less Expensive to Buy Than Rent

One of the main trends continuing throughout 2019 and into 2020 is the fact that it’s less expensive to buy than rent, in most markets. Interest rates are still holding strong near all-time lows and home builders have even seen an uptick in sales.

Foreclosures are not being sold at the same rates as they once were by banks and investors are buying homes in order to turn them into rentals. With the cost of renting rising, buying a home is becoming more affordable and a more feasible option for many first-time buyers.

Increasing Wages with slowing Home Price Appreciation

When it’s all said and done, the two factors that matter the most with the housing market are the ability for buyers to pay their mortgage and the affordability of homes. Currently, wages are increasing and home price appreciation is slowing, which will help to make it easier for more buyers to afford homes in 2020.

As younger buyers start to make more money and more affordable homes are found on the market, it will likely lead to more first-time buyers entering the housing market in 2020.

Not only will younger buyers help shift the demand for smaller, more affordable homes, but so will senior buyers. A limited inventory of smaller, one-level homes could lead to high competition within this area of the market, which usually favors the sellers.

Suburbs Are Growing Again

The “back to the city” trend of the early 2010s has started to shift to a move back to the suburbs. With many millennials having children, they are doing what past generations have done and sought out smaller, suburban communities. It’s likely this trend will continue, which may lead to more home sales in the suburbs, while cities may suffer a bit.

Will There Be a Recession?

While there are plenty of signs pointing towards a strong real estate market in 2020, many believe a recession is coming. However, many experts don’t believe the real estate market will be impacted strongly by a recession.

The main reason for the prediction of a recession is monetary policy. Many believe this deciding factor could lead to slower growth if the short term interest rates rise too quickly. For 2020, however, the U.S. housing market looks like it will be great for investing. It will be a good time to buy a home and some sectors of the market are expected to out-perform others.

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