The 2020 USA HOUSING REBOUND
If you have been reading our news articles over the last few months you would have seen that inventory levels are becoming an issue for the US housing market.
The solid economy and strong employment numbers are starting to fuel US housing sales, mortgage rates dropped below 4% this past year in the U.S, and this opened the door for many people to refinance current loans.
One comment which may seem a bit excessive was made by realtor.com, they predict residential property inventory to “evaporate” in 2020., they state ”it will make it more challenging for buyers to find a home despite attractive interest rates,” the Santa Clara, Cal.-based company states.
The driving force behind this evaporation is “Millennials” their buying behaviour has become more aggressive as they want to invest now as the market is rising. Apparently, younger buyers are eschewing inner-city living and have their sights set on 1,800 square-foot homes in the suburbs, with good neighborhoods and decent schools. It is predicted that Millennials will take more mortgages than any other group in 2020.
According to other US property sites we are on the brink of “bidding wars” thanks to low mortgage rates and thin residential housing inventories, sellers can expect bidding wars in 2020, Redfin reports. “Low mortgage rates will continue to strengthen home buying demand, but due to a lack of new homes for sale and homeowners staying put longer, there will be fewer homes on the market in 2020 than in the past five years,” the company predicts. “More demand and less supply mean bidding wars will rebound in the first quarter.”
While this all seems very positive for the active investor today we must watch the market closely in 2021 onwards as low montage rates are what fuelled the last crash in 2008.
CNN stated at the being of the year that Inventories in the U.S. housing market are at multi-year lows. They state that the U.S. housing market is riding high right now but we need to keep an eye on what could be around the corner.
The National Association of Home Builders/ Wells Fargo Housing Market Index rose to 76 in December— the highest reading in two decades. Taken at face value, the data suggest that the US housing market is on track for continued strength.
The same argument is being voiced by Forbes, they state 2020 will be a challenging year for the housing market. On the one side, there’s a strong US economy that has driven the unemployment rate to record low levels, boosting disposable income, which makes a bullish case. Then, there are low mortgage rates and housing shortages, which add to the bullish sentiment.The Case Shiller Home Price Index in the US reached an all-time high of 218.27 Index Points in September of 2019, making it difficult for first-time home-buyers to afford a home.
But maybe we should be listening to Fannie Mae (The Federal National Mortgage Association) as they are the ones on the front line when it comes to mortgages. They state that “Housing will recession-proof the U.S. economy in 2020”
The U.S. housing market will be an “engine of growth” for the economy in 2020, dispelling the risk of recession, according to Fannie Mae Chief Economist Doug Duncan.
“Housing appears poised to take a leading role in real GDP growth over the forecast horizon for the first time in years,” Duncan said. “We now expect single-family housing starts and sales of new homes to increase substantially.”
“We now expect single-family housing starts and sales of new homes to increase substantially, aided by a large uptick in new construction as builders work to replenish inventories,” Duncan said. “Despite the expected increase in the pace of construction, the supply of homes for sale remains tight and strong demand for housing is continuing to drive home prices higher.”
No matter which opinion you take or which voice you listen to it is clear that 2020 is going to be a very active year for the US housing market, some say the biggest in 10 years.
We have seen this first hand with our inventory levels, properties are being sold quicker now than in 2018 and 2019 as prices seem to be creeping up especially in the likes of St Louis and Cleveland.
If you would like to see our latest US inventory please email email@example.com