Buying a Home in 2020 & Everything You Need to Know
With each new calendar year, buying and selling trends shift and there are notable housing market fluctuations. 2019 was a meaningful year for the housing market in the United States, and it even reached some record-breaking milestones. For one, the median price of homes is now up to $316,000 which is actually the highest it’s ever been.
As we’re entering the next decade, let’s break down what the experts are predicting for what’s in store for home buyers in 2020. Here are the anticipated real estate trends for 2020 and everything you should know as a buyer going into this next decade.
Interest rates will be low in 2020
When it comes to buying a home, an important metric to track is the mortgage interest rate. So far, the outlook for interest rates in 2020 appears to be positive for buyers because economists are predicting it’s going to remain below 4% for all of the most common types of mortgages. Going into 2019, the predictions were pointing to a much higher 5%–5.5% interest rate for the year, which means economists are feeling much more optimistic about 2020.
So what does the relatively low interest rate mean for home buyers? It means that if you’re in the market to buy a home, 2020 would be a favorable time to start looking so that you can lock in a low interest rate while it’s holding steady in the mid 3% range. Experts aren’t expecting the rate to move too much in either direction during the year so you still have time to organize your finances, work on your credit score, and save up for the down payment.
Buyers will have competition
In 2020, more millenials will be starting to look at options for purchasing their first home. Similarly, baby boomers will be growing older and with the increasingly popular trend of aging in place, they aren’t moving out of their homes as quickly as in the past. According to Redfin, the average homeowner stays in their home for 13 years and is only trending up. This means there are fewer properties to choose from, and there is more competition for the available options.
On the bright side for buyers, new home construction is said to be on the rise in 2020 which will allow potential buyers to cast a wider net in their search for the perfect home. Many of these homes are being built in less densely-populated areas around the country which will create more affordable neighborhoods. However, if you’re on the hunt for a place that’s in high demand such as a two bedroom condo in the San Diego suburbs, you can bet that you’ll have some competition.
How to buy a home in 2020
In order to find a home that you love at the right price in 2020, you’ll need to identify your “must-haves” and separate them from your “nice-to-haves.” For example, if you, your partner, and your child are going to be living in the house and you work from home, you might consider two bedrooms to be a must-have and a home office as a nice-to-have.
You’ll have the best chances of finding a place you love if you’re flexible and have clear priorities. Also, it pays to be creative — for example, home offices could be made from partitioning off part of a living room or even an add-on to the side of the property. Talk to your realtor about realistic must-haves because the greater the competition is, the more tradeoffs you’ll likely need to make. And who knows, maybe your realtor will find a property or two outside of your expected search range that meet all of your must-haves and nice-to-haves.
Another real estate buying tip in a competitive market is to send an additional note along with your official offer letter to the seller. If you have a personal story to tell the owner about how you can picture yourself cooking in that kitchen for your extended family during the holidays or that you can see your dog running around that backyard, it might help them decide to pick you. Especially for people who have sentimental attachments to a home they’ve lived in for a while, personal stories can add significance to your offer, and they will want their home to go to someone who will appreciate it as much as they did.
Home prices will continue to go up
In 2018, home prices rose by a relatively high percentage: 5%. In 2019, prices continued to rise but at a slightly slower rate of 3.3%. The predictions for 2020 are that home prices will continue to grow at a rate of 2.8% or so. Economists are expecting the growth to be steady and not so accelerated that it will cause any panic in the housing market.
As a buyer in the 2020 housing market, you’ll need to figure out your budget and what you can afford to pay for a home. Many lenders offer a free mortgage calculator so you can crunch the numbers to see what suits your personal circumstances because you don’t want to get stuck with a 30 year mortgage that’s outside a comfortable range for you financially.
Another tip on how to navigate the buying market in 2020 with home prices on the rise is to not let the competition get to you. Regardless of the prices, you’ll always have competition, and there will always be another house going up on the market — make sure you’re weighing your options for the long term and aren’t feeling rushed into purchasing a new home if you’re not ready. Be sure to have a candid conversation with your realtor about your hopes and worries for buying a home so that you can figure out the best, most strategic course of action together.
2020 will be a technology-first year
Technology has been slowly integrating into the real estate market for years, but in 2020, it’s expected to speed up even more. It wasn’t too long ago that everything for buying a home was manual — from searching for potential properties to paperwork, it was all done by hand. In 2020, as more tech-savvy buyers enter the market, they are going to have different expectations than the previous generation who bought houses.
What this means for the housing market is that mortgage lenders will need to meet these buyers needs by expanding and improving their technology platforms. On the realtor side of the equation, buyers should look to hire a professional who is tech-savvy and uses the latest technology offerings for finding potential properties for buyers. More and more of the home buying process is moving online so you can expect that a well-qualified realtor will utilize the power of their online network to pick out the best options for you as a buyer.
If you’re looking to buy a home in San Diego or are curious about more of the upcoming predictions and trends for 2020, reach out to Realtor Nick Rogers today to kickstart your home buying experience!