It’s been over ten years since the financial crisis in the US crashed the housing market to unthinkable levels. A slow but steady increase over the years has brought the market to record highs but, will this continue? What goes up must come down… But, when? Experts are predicting a 2020 housing market crash but they predicted the same last year. With unemployment rates at a fifty year low and a presidential election at the helm, can we sustain this forward momentum?
Edit: Covid-19 has substantially changed the unemployment rate and housing market int he US. Look for our other articles pertaining to this matter.
If you check out home price timelines you’ll see a lot of interesting changes in the housing market over the years. Specifically, the cost of homes across the US have risen above what they were pre-2008/9 crash. That $250k home in your neighborhood likely dropped to $175k in 2008 but has an estimated value of $350k now. Something like that at least.
So, will the market have its downfall in 2020? Experts aren’t so sure. “We think the housing market will remain strong for the most part in 2020, as low-interest rates will keep demand high for new mortgages,” says Josh Stech, CEO, and Co-Founder of Sundae. When the job market is strong it makes for a great deal of disposable income. That’s more people can spend on a mortgage or rent. A lot of people are buying or have bought homes in recent years and there’s actually a shortage of available houses. This could also be due to high employment rates. Families and friends don’t necessarily have to live together to save money. With increased income, they’re able to have a place of their own.
On the other hand, home pricing increases can create problems for potential buyers in certain income brackets. Going from renting to buying a home is a big change, especially if you’re a first time buyer. Not too long ago, renting an apartment was around the same price as a mortgage on a reasonably priced house. So, why not buy and make an investment rather than throwing money away on a rental each month? Home prices soaring is great for sellers and those that already have equity, but not so much for those without a current investment.
Interest rates are expected to drop in the coming year but it won’t matter much if the homes are simply not there to buy. Those already in a home may be tempted to sell, but not at the extra expense of buying another, more costly home. This alone makes us wonder if people will simply stay in their homes until the market is more predictable.
Bringing us to a final point… The 2020 housing market is fairly unpredictable at this point. Real estate agents are suggesting we wait to buy but, is that to help the buyer or the agent? The higher prices go, the more commission an agent or Broker will make. But if the market crashes, that’s no good for an agent or a seller.
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