"Low mortgage rates started to revitalize the market at the end of this summer, but we won't see their full impact on demand for housing until next year," said Redfin chief economist
Redfin's 2020 housing market predictions:
Bidding wars will rebound thanks to low mortgage rates and a lack of homes for sale
Low mortgage rates will continue to strengthen homebuying demand, but due to a lack of new homes for sale and homeowners staying put longer, there will be fewer homes on the market in 2020 than in the past five years. More demand and less supply mean bidding wars will rebound in the first quarter. Redfin expects about one in four offers to face bidding wars in 2020 compared to only one in 10 in 2019. This increase in competition will push year-over-year price growth up to 6% in the first half of the year, considerably stronger than the 2% growth seen in the first half of 2019. Supply and demand will become more balanced later in the year as more listings of new and existing homes hit the market and price growth will moderate to 3%.
30-year fixed mortgage rates will stabilize at 3.8%
Throughout 2020, 30-year fixed mortgage rates will remain low, hovering around 3.8%. Faced with slowing economic growth, the Federal Reserve will keep interest rates low. Although the housing market is strong, weakness in other sectors, like manufacturing, is pulling down on the economy. Because investors are already bracing for the possibility of a recession, Redfin doesn't expect mortgage rates to fall much lower than 3.5% in 2020 even if the economy weakens. If the economy strengthens, Redfin expects mortgage rates to stay below 4.1%.
For the first time, Hispanic Americans will gain more wealth from home equity than white Americans
In the next decade, Hispanic Americans will, for the first time, gain more home equity than white Americans. That's because the majority of new homeowners are Hispanic, and home values in Hispanic neighborhoods are increasing faster than in white neighborhoods. There are more Hispanic homeowners in
Climate change will become a bigger financial factor for homebuyers and sellers
In 2020, homebuyers and sellers will take the consequences of climate change into account when deciding to buy. The financial costs of climate change are already becoming more tangible as fire and flood insurance premiums rise. Over the next decade, higher insurance premiums in high-risk areas will make housing even less affordable to more people. And in areas with the highest risk, insurers may stop providing insurance altogether, which means it will be nearly impossible to secure a mortgage in those areas.
Affordable Southeast cities like
More city streets will become car-free
In 2020, more cities will favor green modes of transit and actively discourage driving. Some cities already have plans in the works—San Francisco's
To read Redfin's full predictions, please visit: https://www.redfin.com/blog/2020-housing-market-predictions/.
To find out which of the predictions come true and which turn out to be incorrect, follow the Redfin Blog for real-time research on the housing market.
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry's lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 85 major metro areas across the U.S. and
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the
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