2020 Market Predictions

Housing Market 2020 Predictions

After a cooling-off period in 2019, home prices regained momentum and are expected to further increase in 2020. How much? A cohort of economists at the National Association of Realtors Forecast Summit predicts a 3.6 percent rise; ULI predicts 2.5 percent, Zillow estimates 2.8 percent and 0.8 percent. The California Association of Realtors (CAR) believes the median home price in California likely will increase by 2.5% to $607,900 in 2020, slowing from a projected 4.1% annual gain in 2019. The group predicts sales of existing single-family homes will increase 0.8% in 2020 to reach 393,500.

While low mortgage rates make it easier for buyers to afford homes, this is being offset by the possibility of an economic contraction due to international trade concerns, said Jared Martin, president of CAR. “Buyers have more purchasing power than in years past, but they may be reluctant to get off the sidelines because of economic and market uncertainties.”

“California’s housing market will be challenged by changing migration patterns as buyers search for more affordable housing markets, particularly by first-time buyers, who are the hardest hit, moving out of state,” said CAR Senior Vice President and Chief Economist Leslie Appleton-Young. “With California’s job and population growth rates tapering, the state’s affordability crisis is having a negative impact on the state economically as we lose the workers we need most such as service and construction workers, and teachers.”

What are the experts saying?

“Housing remains a solid foundation for the U.S. economy going into 2020. Although economic output is expected to soften—influenced by clouds of uncertainty in the global outlook, business investment and trade—real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting. Accordingly, 2020 will prove to be the most challenging year for buyers, not because of what they can afford, but rather what they can find.” – George Ratiu, Senior Economist,

“While the economy is in a sweet spot, improvements in housing market sales volumes will be modest heading into next year simply due to the lack of available inventory. The demand is clearly not being met for entry-level millennials and trade-up Generation X homebuyers. If there was more inventory of unsold homes for buyers to choose from, home sales would be rising at a faster rate.” – Sam Khater, Chief Economist, Freddie Mac

“The consensus [at the Forecast Summit] was that mortgage rates may rise, but only incrementally. I expect to see home price affordability improvements, too. This year we witnessed housing costs grow faster than income, but the expectation is for prices to settle at a more reasonable level in the coming year, in line with average hourly wage growth of 3 percent on a year-over-year basis.” – Lawrence Yun, Chief Economist, NAR

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