A year of low unemployment, lower interest rates and a scarcity of housing stock…
It seems that a 50-year low unemployment rate (Washington Post) in addition to a 17% decrease in mortgage rates (Washington Post) compared to January 2019 are two factors that are expected to fuel the housing market in 2020. There is a bottleneck however – finding enough homes for buyers, especially low and middle-priced housing.
Having said that, the housing market is still doing far better than it was doing a year ago. According to Fannie Mae Chief Economist Doug Duncan, the U.S. housing market is expected to fuel economic growth in 2020. Sales of new houses will jump 12% this year reaching the highest level since 2017(Housing-wire) The ESR (Economic and Strategic Research Group) expects home builders to expand production in reaction to an increased labor market strength and consumer spending, as well as because of favorable interest rates. Despite the expected rise in construction pace, the supply still remains tight as a stronger demand is driving home prices higher, particularly at the entry level price tiers. (Fannie Mae)
Any risks to growth have reduced as a ’Phase One’ U.S.-China trade deal appears to be in place and global growth seems likely to reverse course and accelerate in 2020 – (Fannie Mae)
Let’s have a look at what experts have to say for the 2020 U.S. housing market.
The National Association of Realtors (NAR) has predicted interest rates to be lower and also a moderate growth in the housing market, with new home sales expected to rise to 750,000 – a 11% increase – and existing home sales to rise by 4%. Which markets are expected to have higher home price appreciation than others? Ogden, Utah; Las Vegas; Fort Collins, Colo.; Colorado Springs; Dallas/Fort Worth; Columbus, Ohio; Raleigh/Durham/Chapel Hill, N.C.; Charlotte; Charleston, S.C.; and Tampa/St. Petersburg, Fla. You can check out the entire report by clicking here.
Realtor.com expects interest rates to be an average of 3.85% throughout the year and bump up to 3.88% by the end of year. Limited inventory and rising mortgage rates may lead to a drop in sales with existing home sales to be down by 1.8% The following markets are expected to have the highest growth in sales as compared to others: Columbia, S.C.; New Haven-Milford, Conn.; Rochester, N.Y.; McAllen-Edinburg-Mission, Texas ; Urban Honolulu, Hawaii. You can check out the entire report by clicking here
Online real estate brokerage Redfin believes that the housing market may be more competitive in 2020 with more buyers in the market because of lower mortgage rates, and because of the lower inventory stock, the YOY price growth may go up to 6% in the first half of the year. Mortgage rates will remain low at around 3.8%. Charleston and Charlotte will see the highest home price growth with an increasing number of migrants coming in from expensive cities. You can check out the entire report by clicking here
Zillow predicts a more stable & affordable market for 2020. Home value and annual growth is expected to be slower and median home value is expected to end 2020 up 2.8% compared to the end of 2019. Mortgage rates may remain low for the bulk of the year, which in turn will keep home purchase demand strong leading to a price growth. You can read the complete report by clicking here
How do you think the mortgage market will fare in 2020? Do you think that lower inventory will be a bottleneck to a possible strong purchase market? And, as service providers to the mortgage and related industries, our concern is with the possible volatility in the market, and our ability to manage the changing conditions. For instance, as a title agent or underwriter, are your title insurance operations ready to scale up (or down) based on the rapid changes in the mortgage industry that may occur? Do you have the right technology infrastructure in place to be able to smoothly handle a potential significant and quick growth in purchase transactions? Similar questions are relevant for other players, like mortgage lenders, banks and credit unions. And for services like tax reporting.
Lenders are increasingly focused on reducing turn times and this affects all service providers, including title agents.
Specifically for title agents, whether you have in-house staff to handle title searches, or outsource it to a third party provider, turn time is one of the first things you need to consider, as it can make or break a relationship in times of increased demand. If title searches are completed in-house, you may need a major investment to have the right technology platform and to develop the appropriate state or country wide online database and a network of abstractors to service the growth. A simple option would be to leverage a vendor partner who has the technology platform readily available along with nationwide presence. Vendors like SLK Global Solutions are already completing searches in all 50 states, backed up by robust online databases and a network of abstractors, and they combine this with the best-in-class technology platforms to reduce turn times by as much as 70%.
Do let us know what you think of the blog by leaving your comments below. Click in the links to know more about our SmartProp® property search and SmarTrak® tax reporting solutions and reach out to us by sending an email to firstname.lastname@example.org