The commercial and residential real estate industry witnesses both positive and negative developments each year. The key influential factors are interest rates, government policies and demographics. In the last quarter of 2019, the national vacancy rates stood at 6.4% for rentals and 1.4% for homeowner houses, according to data released by the US Census Bureau. In fact, by the end of the fourth quarter, 88.5% of the housing units in the United States were occupied.
Last year saw quite a boom. If you are about to enter the market to buy a home, here’s a look at the trends expected for 2020.
Rise in Young Home Buyers
In 2019, 37% of the homebuyers were millennials, a figure that is expected to rise to 45% in 2020. Millennials are getting married, securing stable jobs and looking at owning their own home. They are an internet savvy population and will definitely ensure extensive online research before making a purchase decision. They have their eyes set on friendly neighborhoods with schools and markets in close proximity.
As a buyer, you should not only look at the home itself, but also the seller, the neighborhood and the amenities in close proximity. Don’t hesitate to ask questions. The process can be simplified by hiring the services of an experienced real estate agent, who can take care of all the basics for you.
Low Mortgage Interest Rates
In 2019, the interest rates declined to below 4%. Mortgage interest rates are expected to be an at all-time low of 3.2% in 2020 for a 15-year loan and 3.7% for a 20-year mortgage. Reduced rates will help strengthen property demands. However, there might not be enough homes for sale and increased demand coupled with low supply could lead to bidding wars in the first quarter of the year. Buyers are less likely to postpone purchases, since the dip is only temporary.
Rise in Home Prices
There have been significant price hikes in 2018 and 2019 and this year is unlikely to be any different. Real estate analysts predict that in 2020, home prices will continue to rise, although not at a rapid rate. They expect growth of about 2.8%, which is lower than the growth rate seen I the past two years. So, make sure to check what a suitable budget would be for you and stick to it. Start saving well in advance, compare prices and get your real estate agent to help you negotiate the best possible deal.
Growth in Luxury Homes
The luxury home industry is expected to see a strong rise, particularly in cities like Nashville and San Jose. This growth is likely to be driven by the profits that sellers received from high-end properties. This market will continue to expand despite minimal reduction in the prices of luxury properties.
Home Décor Trends
Americans are likely to embrace floral wallpapers, colored cabinets and clutter-free interiors to make great statements. Fun and high contrast home designs, with neutral undertones and traditional detailing, will definitely attract more buyers this year. Pop colors and minimalism are expected to make a comeback and will make a dramatic difference to property sales.
To maximize sales and attract quality tenants, most property owners opt for useful amenities. Fully equipped kitchens, ample parking and communal gardens are appreciated by most clients. They improve the living standards and offer tenant friendly benefits. These upgrades boost property value and help the home stand out from the others for sale.
In conclusion, if you are planning to buy a home in 2020, make sure you invest enough time to understand the trends that will dominate the real estate market. Don’t hesitate to pay a bit more than your budget if the home offers everything you seek. Real estate investment is also a great way to grow your wealth, so try to get the best value from your investment.