2020 Market Update
Last month, The Fed concluded their first meeting of 2020 and announced that rates will remain unchanged. No cuts by the Fed means no increase in mortgage rates. The outcome of this meeting tells us that the economy is off to a great start as we begin 2020.
In 2019, the market experienced record low inventory, the stock market went up and unemployment hit an all-time low. In addition, The Fed cut rates three times throughout the year.
This created an unexpected opportunity for homebuyers and homeowners alike that is still translating to today, where rates are at their lowest levels since November of 2016.1
The housing market is holding strong with appreciation at 4.7% for 2019 and an expected 2.8% for 2020, compared to a 3.8% average since 1996. Although there are talks of a potential upcoming recession, a recession does not necessarily mean there will be a housing crisis. In fact, the housing market has historically only been impacted by a recession two times – in 1991 and during the housing collapse of 2008.
Combined with an expected rise in appreciation, builder confidence is up and new construction remains attractive. Rent is also up 2.9%, so 2020 is shaping up to be a great time to invest in homeownership.
The Millennial Impact
Millennials will remain the largest segment of homebuyers this year at about 37%. Different from baby boomers, millennials are not as interested in the large, McMansion style homes that once dominated the market for older generations. Instead, they are looking for smaller, more functional homes. Due to the rising costs of rent and affordability in major cities, millennials are also starting to fan away from cities to the suburbs that offer aspects of urban life.
What To Expect in 2020:
Rates are expected to remain low throughout 2020, which will mean two things for the market.
- For homeowners, there will be major refinancing potential. If you own a home, it is a good time to reevaluate your mortgage to see if you can save money on your monthly payment, shorten your loan term, or look into making some home improvements through a cash-out refinance.
- If you want to be a homeowner and you’re starting the spring market search right now, low mortgage rates will level the playing field for you. Inventory is still tight and home prices have gone up in many areas of the country, but with mortgage rates at their current levels, the amount of house you will be able to afford will increase.
If you would like to get started and discuss your financial goals, and speak with a Guaranteed Rate licensed loan officer.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information. Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Guaranteed Rate, Inc. for current rates. Restrictions apply.