Mortgage and real estate experts are looking towards 2020 to see what is expected in the coming year. This past year brought low rates, high demand, and a small supply of available homes, with low priced homes being particularly hard to find. As we look forward to the coming year, here’s a closer look at what to expect across the country and in Maryland.
Millennials Continue Home-Buying Streak
In 2019, many Millennials hit the markets in search of their first homes. This past year, Millennials accounted for 46 percent of mortgage origination in September alone. In 2020, that trend continues, as this generation continues to rank owning a home as a top goal in life. The combination of low-interest rates and higher income levels seen in 2019 and into 2020 has spurred this drive.
Interestingly, Baby Boomers, the generation nearing retirement, are not moving. Many are staying in the homes they have loved longer, aging in place rather than putting fresh inventory into a tight market. The new construction market is slow to come back after the real estate crash of a decade ago, making it difficult for interested Millennials to find homes in their budgets.
Low Rates Continue
At the end of 2019, mortgage rates averaged around 3.75 percent. This was a low point for the year, and the low rates are expected to continue, at least in the beginning of 2020. Experts expect rates to stay between 3.7 and 3.9 percent through 2020, though these numbers can always change. Fannie Mae is actually predicting lower rates of 3.5 to 3.6 percent.
Increased Prices for Homes
Low inventory and high demand created through low-interest rates creates a scenario where home prices start to climb, and this trend will likely continue through 2020. Forbes estimates a 5.6 percent increase by the fall of 2020, which is more than was seen in 2019. This increase will hit the entry-level homes hardest, as this is the area where shortages are the most common. Lack of available starter homes pushes up the price for these properties, and that increase carries over into other types of homes.
2020 Forecasts for Maryland
In Maryland, these trends are expected to be similar. In 2019, the state was a seller’s market with high prices and fast sales. This trend is expected to continue in 2020 as Maryland follows national real estate trends. The high population levels in Maryland, even with its small size, are expected to drive up competition for available homes, particularly in DC’s suburbs.
If you are interested in entering the home buying market in 2020, you will need to be ready to move quickly. This means having financing in hand before you start shopping. For help securing financing that fits your needs, reach out to Maryland local mortgage professional Drew Gilmartin/Tom Cumpston at First Home Mortgage.