2020 Real Estate Tips and Trends

If you plan on buying or selling a house in 2020, you'll want to be in the know about all the real estate trends we expect to see this year. Learn more. 

Key in the door

Are you wondering what to look for when buying a house in 2020? The new year and new decade will bring new trends to the real estate market and see a continuation of some trends that currently affect both real estate investors and homeowners around the country.

Whether you’re a first-time home buyer or a seasoned investor, it’s vital to understand how real estate trends are affecting the market. Low mortgage rates, a changing rental landscape, low inventory and other factors will shape the market in 2020 and could influence whether you decide to buy or sell real estate this year.

Mortgage Rates Will Stay Low

As the Federal Reserve continues to strive for a slight increase in inflation, home buyers can expect mortgage interest rates to remain low in 2020.The Fed hopes to boost economic activity with an annual target inflation rate of 2 percent, but it hasn’t been able to achieve that rate consistently for some time. As a result, it has announced that it plans to keep short-term rates low for the time being.

This is good news for home buyers who plan to finance, especially as a strong economy continues to encourage homeownership in many areas. However, if you’re selling a home in 2020, expect buyers to ask you to contribute towards closing costs. Average closing costs will remain at about 2 to 5 percent of the price of a home, with buyers searching for ways to mitigate them.

Landlords Will Face New Challenges

Residential landlords in many areas may need to tighten their belts as rent-control ordinances come into effect. Average investment in multifamily properties has already dipped in New York and California, where rent control laws were passed last year. Aspiring landlords may find it more difficult to break into the retail investment market, as home prices continue to climb in cities like Los Angeles, New York and San Francisco, not to mention relative newcomers to the high-rent scene, like Seattle, Portland and Nashville. Rent prices will continue to go up, however, and many younger home buyers will look to purchase in the suburbs or to relocate altogether to more affordable parts of the country. 

Inventory Will Remain Low

As the largest group of millennials turns 30 this year, more and more young people will start looking to buy their first homes, so the number of homes on the market, especially in desirable areas, will remain low, and bidding wars will continue. Many baby boomers are either remaining in their own homes longer or are looking to downsize into condos, townhomes or starter-size homes, which will exacerbate the shortage of properties available on the market. 

Starter Homes Will Grow in Popularity

In the wake of the Great Recession, home builders largely focused on catering to the high-end market, but now that the economy has mostly recovered, starter home construction is being ratcheted up to meet the demands of younger home buyers who want to buy their first homes, and older home buyers who want to downsize. 

With unemployment and interest rates at record lows, and many millennials getting married and starting families, it’ll be no surprise to see new-build starter homes appearing on the market. 

Home Prices Will Slow, but Demand Concentration Will Increase

In 2020, new jobs will become increasingly concentrated around major city centers, with a growing portion of workers in the service industry relocating to those areas to seek employment. That means that home prices in those areas will continue to grow, but they can’t grow forever. Real estate prices will actually grow at a slower rate in 2020 than they have in the past. Demand for housing in big markets will stay strong, but if you’re thinking of selling in an area with a high cost of real estate, now is the time to do it, as home prices must slow to wait for wages in these areas to catch up.

If you’re buying a home in 2020, consider buying a home warranty from American Home Shield® to help offset some of the unexpected costs of homeownership. If you’re selling a home this year, a home warranty can both protect you from the cost of unexpected breakdowns in your home while it’s on the market and serve as an enticement to buyers. Contact us today to learn more about our home warranty plans and pricing.

AHS assumes no responsibility, and specifically disclaims all liability, for your use of any and all information contained herein.

Consumer Affairs Icon
Best Company Awards Icon
Women’s Choice Award Icon
Need help?
Talk to our Shield Agents 24/7.