What Are the Real Estate Trends for 2020?
Whether you’re a real estate professional and you want to stay ahead of new opportunities in the industry, or you’re a potential home buyer or seller, you may be wondering what the likely real estate trends are for 2020.
The following is an overview of some of the things we might see in real estate with the start of a new year.
The Role of Technology
The role of technology in real estate isn’t new, but it’s something that continues to grow in significance, and 2020 will be no exception. There’s a new term that’s been coined—the iBuyer. The iBuyer is a company using technology to make instant offers on properties.
iBuyers represent more convenience and efficiency when compared to traditional home sales, and typically what will happen is that the company will estimate how much your home is worth. Then, they’ll make an offer. If you accept, they will be the ones who deal with owning, marketing and subsequently reselling the home.
iBuyers aren’t the same as flippers. Flippers buy low and sell high, or at least that’s the goal. A flipper may be looking for properties that need major work or distressed properties. By contrast, want homes that are in good condition, and they’re going to likely make an offer that’s in-line with fair market value.
Along with the actual transactions, there are other areas where real estate trends are having an impact. For example, many rental communities are using digital concierge services to appeal to renters, and more and more buyers are looking for properties equipped with smart home technology.
Rather than making money by selling high, iBuyers charge a fee, and that’s how they are profitable.
Welcome to Hipsturbia
Hipsturbia is a term that’s floating around for 2020, and it refers to the move of Millennials to trendy suburban communities. The prices to rent or buy in urban areas are going so high they’re squeezing many out, and Millennials are also at the point where many have not only families but school-aged children.
This is leading them to want to move to the suburbs, but they still want a cool atmosphere and some of the urban amenities they may have enjoyed during their city-dwelling years.
Hipsturbia is leading live-work-play communities in suburban areas where there’s walkability, recreation, restaurants, and access to transit.
Somewhat in-line with this concept is the demand for communities where people share common interests and values.
Many hipsturbia communities are found on the outskirts of bigger cities, and they tend to be diverse and pedestrian-friendly.
A Possible Recession?
Some are saying the U.S. could go into recession in 2020, so should the real estate market be concerned? Probably not.
While Zillow’s research along with other research and analyst insight, says we may move toward a recession, most agree it won’t be like the Great Recession. It also won’t be because of a housing bubble this time around.
For people who do have some cash on the sidelines or who are looking for a good deal, a recession in 2020 could provide unique deals and buying opportunities.
The Affordability Issue
Mortgage rates are expected to stay low in 2020 and maybe even drop a bit more, but that doesn’t mean there will be more affordable options for buyers. The general unaffordability of real estate is only going to increase in many places, and this includes not only properties for sale but also rentals.
There is a limited inventory of starter homes on the market, and many Baby Boomers are staying in their homes longer than in years before, which is further putting pressure on inventory. That limited inventory, paired with fairly stagnant wages, is making buying a home difficult for some.
Finally, another trend that could make an impact on the real estate market as a whole is refinancing. With rates below 4% and the rising prices of homes across the U.S., the fall of 2019 already saw an uptick in refinancing.
Freddie Mac reports they expect to see an ongoing surge in refinancing activity as homeowners tap into the benefits of combined low rates and increased equity.
For the most part, analysts don’t expect 2020 to look too different from much of what we saw in 2019 as far as real estate trends.