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May 29, 2020
Unpredictable and uncertain, are words that linger in our minds nowadays. Many of us are wondering what will happen a week or a month from now. A lot had put a hold on many things but the wise ones make good use of this time to plan and prepare.
Before the pandemic came into the scene, the housing market saw modest increases across the board in the past year, though there were hot spots in the market in terms of both geography and price ranges. House prices had risen for 33 consecutive quarters across the United States. The housing market predictions were clearly pointing out that all the housing indices would trend upward for the nation as a whole as well as in every state, including the top 100 metro areas.
After the coronavirus pandemic came into being, the housing market forecast runs the gamut from optimistic to pessimistic. The updated data for housing market predictions from various sources shows that sales of homes will decline by 15 percent in 2020. The home prices would flatten out. That’s mainly due to vigorous social distancing norms and economic uncertainty has compounded this temporary restraint on real estate transactions.
Housing market predictions that take Covid-19 into account have already come out. Capital Economics is estimating four million homes will be sold in 2020. This would be the lowest rate since 1991. For comparison, roughly 5.3 million homes sold in 2019. US housing market predictions for the longer term will depend on the lingering impact of the coronavirus. How long will it take for the economy to return to normal? How quickly will the service economy re-open and get people back to work?
Before the Covid-19 pandemic literally went viral, US housing market predictions for 2020 showed appreciation of roughly 1 percent. Existing home sales were predicted to fall about two percent, while single-family starts were predicted to increase six percent.
For the rest of 2020, in hot job markets and communities that fit the youngest generation’s ideals, price increases of 8-15 percent are possible year-over-year. For most everyone else, real estate is appreciating at or just above the rate of inflation.
What will 2020 be like for buyers? If you qualify for a mortgage, you have a more limited selection and prices are close to what they were before the coronavirus pandemic started, but you have relatively little competition. In response to the COVID-19 national emergency, borrowers with financial hardship due to the pandemic have been able to request forbearance, which is a pause or reduction in their monthly mortgage payment. And borrowers can request an additional six months if needed.
What will 2020 be like for sellers? Expect homes to be slower to sell, and you may have to reduce the price to move it. Or you may need to wait a few months to see things shift from a buyer’s market to a more balanced market. The only exception would be the “affordable” homes that are in short supply. In that case, you’ll benefit from a seller’s market as soon as people start shopping again as quarantine rules relax.
What will 2020 be like for investors? Many US housing markets are ripe for investment in 2020, making it a great time to buy investment properties. Of course, working with a team of experts with years of investing experience will be important for your success.
Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate. He’s also the host of the top-rated podcast – Passive Real Estate Investing.
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