The current healthy economy portends a strong real estate market throughout 2020. A strong job market, with unemployment at a near 50-year low and relatively low-interest rates should keep real estate going, but there will remain, it seems, a shortage of inventory. Industry watchers say that the market is looking better than it did a year ago. Whether you are or plan to be a seller or buyer, you should find some good news. So let’s look at what you can expect from the Metro Detroit Michigan real estate market n 2020 and the implications for both sellers and buyers.
Mortgage Interest Rates Still Down
One thing you can expect from the real estate market in 2020 is continuing low mortgage interest rates. These rates declined throughout 2019, dipping below 4% for most conventional loans. Financial gurus expect interest rates in 2020 to hover around 3.7% for 30-year mortgages and 3.2% for 15% mortgages.
Of course, this is just an informed prediction – nothing is guaranteed in the volatile financial arena. Trade wars and tariffs could change things, as well as adjustments the Federal Reserve sees fit to make.
If you’re a seller, keep in mind that low-interest rates will motivate buyers to buy now instead of waiting in order to beat an increase in rates. Still, it pays to wait for the right offer. Your agent can help you set expectations in line with interest rates and assist you in marketing accordingly. (To discover more, call 248-330-4421.)
Even though interest rates are low, real estate experts still recommend a 15-year fixed-rate mortgage for buyers. You will know what your payment will be each month, and you’ll be locked in at a lower rate even though the monthly payments will be higher than for a 30-year loan.
Home Prices Rising at a Slower Pace
A second easily observable trend in the real estate market in 2020 is the slowing rise in home prices. “Overall, home prices grew slower in 2019 (3.3%) than in 2018 (5%). And this year seems like it will be no different. In fact, . . . home prices will only rise by 2.8% in 2020. So, you’ll likely see home prices continue to creep up, but they probably won’t knock your socks off with rapid growth like we’ve seen in previous years.”
For sellers, this means you can probably make more money when you sell. But the downside is that these rising prices are pricing many buyers out of the market, so it may take you longer to sell your house. With keener competition and fewer offers, be sure to lean on your agent’s selling expertise.
Obviously, these rising prices (though slower) will mean a tougher time for buyers. Determining exactly how much house you can afford becomes even more critical – and that means factoring in all the other costs and expenses above and beyond the monthly mortgage payment. It may also mean some financial sacrifices in other areas, but it will definitely mean broadening your search. And the services of a good agent will become that much more critical.
Most Home Buyers Still Millennials
A third trend in the real estate market in 2020 is that millennials will continue to make up the largest portion of the home buying market. Millennials – those people born between 1980 and 1998 – accounted for 37% of homebuyers in 2019, and they are expected to remain the largest home-buying population throughout 2020 and beyond.
This millennial phenomenon in the real estate market in 2020, has some definite implications for home sellers. First of all, millennials value lifestyle advantages and features oversize in a home. But, more important by far, is the fact that millennials are at home in the digital world, and your marketing has to take that into account. According to one top agency, “[v]irtuallyall millennials (98%) use the internet for their home search – and more than 80% of them found their home on a mobile device last year. So, you need to make the best possible impression on the internet.”
For buyers, this means you know who your competition is, but it also means you’ll have keen competitions in areas and among homes that appeal to millennials. And this means you, as a buyer, are left with two choices: 1) reassess and reprioritize and begin looking elsewhere, or 2) use a good local agent who can give you the necessary competitive edge.
How to Take Advantage of the Trends
Whether you’re a seller or buyer, you should strive to take advantage of these 2020 real estate market trends and make them work in your favor. And your best shot at doing this lies in using a local real estate agent. A good agent can help you achieve your goals in the best way and riding on the back of the trends in the real estate market in 2020. Don’t miss out on 2020’s opportunities.