2020 Market Update

Last week, The Fed concluded their first meeting of 2020 and announced that rates will remain unchanged. No cuts by the Fed means no increase in mortgage rates. The outcome of this meeting tells us that the economy is off to a great start in 2020.

Now, let’s take a quick look back at what happened in 2019. Last year, we saw record low inventory, we saw the stock market go up, and we saw unemployment hit an all-time low. In addition, The Fed made some bold moves by cutting rates three times.

This created an awesome, unexpected opportunity for homebuyers and homeowners alike that is still translating to today, where we are seeing rates at their lowest levels since November of 2016.

Housing

The housing market is holding strong, with appreciation at 4.7% for 2019 and an expected 2.8% for 2020, compared to a 3.8% average since 1996. Although there are talks of a potential upcoming recession, it’s important to point out that a recession does not equal a housing crisis. In fact, the housing market has historically only been impacted by a recession two times – in 1991 and during the housing collapse of 2008.

Combined with an expected rise in appreciation, builder confidence is up and new construction remains attractive. Rent is also up 2.9%, so 2020 is shaping up to be a great time to invest in homeownership.  

The Millennial Impact

Millennials will remain the largest segment of homebuyers this year at about 37%. Different from baby boomers, millennials are not as interested in the large, McMansion style homes that once dominated the market for previous generations. Instead, they are looking for smaller, more functional homes. Due to the rising costs of rent and affordability in major cities, they are starting to fan away from cities to suburbs that offer aspects of urban life.  

What we can expect in 2020:

Rates are expected to remain low throughout 2020, which will mean two things for the market.

• For homeowners, we will continue to see massive refinance activity. If you own a home, you should be reevaluating your mortgage to see if you can save money on your monthly payment, shorten your loan term, or look into making some home improvements through a cash-out refinance, because borrowing money is so cheap right now.
• If you want to be a homeowner and you’re starting the spring market search right now, low mortgage rates will level the playing field for you. Inventory has been tight and home prices have gone up, but your secret weapon is going to be mortgage rates coming down, which will increase the amount of house you will be able to afford.

To summarize, we should have an exciting year ahead in the mortgage and real estate market!

For mortgage rate quotes, buyer consultations and any home purchase or refinance questions, reach out to [email protected]