Let me start with my usual disclaimer that all real estate is local, and what happens nationally doesn’t always impact us here in the Tri-Cities. That said, it’s still smart to know what’s being said across the industry as a whole because things like the presidential election or the recession that some (but not all) are anticipating could make for an interesting year.
Despite concerns like those, you might be surprised to learn that the most trusted entities in the industry (when it comes to mortgage rates, home sales, and home prices) are all expecting a strong year. Take a look below at the breakdowns for mortgage rates, home sales, prices and more.
Mortgage Rates
The National Association of Realtors (NAR), Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac are all projecting mortgage rates to be stable throughout 2020:
I think we don’t really appreciate the opportunity that buyers have right now thanks to low mortgage rates, especially compared to the past 40-50 years. Rates have remained under 5% for the last decade, which is dramatically lower than recent history:
- 1970s: 8.86%
- 1980s: 12.70%
- 1990s: 8.12%
- 2000s: 6.29%
Home Sales
Three of the four organizations above also predict an increase in home sales in 2020, and the fourth sees the transaction number remaining stable:
With mortgage rates remaining near all-time lows, buyer demand should not be an issue. But the lack of available inventory might minimize the increase in sales. Lack of inventory is an issue all across the country, including here in the Tri-Cities.
Home Prices
Below are the projections from six different expert entities that look closely at home values: CoreLogic, Fannie Mae, Ivy Zelman’s “Z Report,” the NAR, Freddie Mac, and the Mortgage Bankers Association.
Each group has home values continuing to improve through 2020, with four of them seeing price appreciation increasing at a greater pace than it did in 2019.
A group not mentioned above called Veros Real Estate Solutions has already said that the Tri-Cities should have some of the highest home value appreciation rates in the country this year.
Is a Recession Possible?
In early 2019, a large percentage of economists began predicting a recession may occur in 2020. In addition, a recent survey of potential home purchasers showed that over 50% agreed it would occur this year. The economy, however, remained strong in the fourth quarter, and that has caused many to rethink the possibility.
For example, Goldman Sachs, in their 2020 U.S. Outlook, explained:
Markets sounded the recession alarm this year, and the average forecaster now sees a 33% chance of recession over the next year. In contrast, our new recession model suggests just a 20% probability. Despite the record age of the expansion, the usual late-cycle problems — inflationary overheating and financial imbalances — do not look threatening.
What It Means to You
Mortgage rates are projected to remain under 4%, which is great news for buyers — you’ll be able to get more home for your money, no matter your budget. With growing demand and a limited supply of inventory, prices will continue to appreciate, while the threat of an impending recession seems to be softening.
In other words, it looks like 2020 may be another solid year for the real estate market, both here in the Tri-Cities and around the country.
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