“The more things change, the more they stay the same.”
This sums up the home buying forecast for 2020. While there will still be opportunities for home buyers, the actual buying journey will be as challenging as it has been in recent years.
The number of homes for sale has decreased since 2015, and inventory could reach an all-time low in 2020, despite an expected increase in new home construction. Lower inventory means more competition with other buyers, which could lead to higher sale prices. And, of course, the quest for finding the perfect home is always a challenge, regardless of the current market.
Here’s a closer look at the trends shaping the home buying market in 2020:
- Millennial Majority. Millennials (those born in 1981-1997) will become the main home buyers in the United States, accounting for more than half of mortgages. This is more than any other generation combined. Why? In 2020, much of this generation will be in their 30s, the age people start thinking about settling down and buying their first home. Millennials will also be active in the home buying market due to family changes as they are partnering up and having kids. And while they are motivated to buy, they’ll face a limited home inventory with heavy competition from other buyers.
- Limited Inventory. As previously mentioned, there won’t be enough supply to meet demand when it comes to the housing market. Baby Boomers are living in their homes longer, and Gen Xers are still comfortable in the home where they’re raising their families, so neither are having the urge to move or trade up to a newer home just yet. Additionally, the builders who survived the housing crash of 2008 turned their focus to building high-end homes resulting in a higher profit margin, but effectively pricing new buyers out of the housing market. Fortunately, there is a shift to building entry-level homes, but it will take a few years for the market to catch up.
- Patience Pays Off. Be prepared for a challenge in finding an entry-level home, as it could take several weeks or even months. However, when you find the home that’s right for you and your family, be ready to act and snatch it up before your competitors. If you’re fortunate enough to have a higher budget, you’ll likely have more inventory to choose from with less competition.
- Affordability. Believe it or not, the limited inventory is not expected to drive up home prices. The appreciation rate is only expected to increase by 0.8% in 2020. Mortgage rates are also predicted to remain steady with a reasonable average of 3.85%
If you’re ready to take the plunge and start your home buying journey, Pacor Mortgage has tools to help you find the perfect home for your family! Visit the Tools page on our website for calculators and advice to help you figure out how much home you can afford, a home features checklist, and much more!
When you’re looking for an outstanding resource for mortgage financing, look no further than Pacor Mortgage! Our 33 years of experience is what makes us the optimal choice for your mortgage needs. For more information about our services or to schedule an appointment with us, contact us at 773-881-7744 or visit our website!
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