Amid the current economic uncertainty of COVID-19, 2020 is proving to be an interesting time for the housing market and its effects on real estate market trends. As these trends have evolved and continue to develop, it’s important to understand the current real estate market trends and also look back at trends over time to help forecast and make sense of the future.
Whether you’re thinking of selling your home, buying a home or are just interested in the housing market, this article will help you understand where the last 10 years have left the real estate market, and what’s in-store for the future.
A Look Back At Housing Market Trends: 2009 – 2019
Real estate market trends have changed dramatically between 2009 – 2019.
After the housing bubble burst and the financial crisis swept the nation, millions of Americans defaulted on their loans and were forced into foreclosures. The Great Recession had a crippling effect on home values across the country.
After 18 months, the downturn finally came to a close at the end of the second quarter of 2009. Since then, there has been a massive increase in home value over the years.
To examine how real estate market trends have changed since 2009, we consulted data collected by the Council for Community and Economic Research. Each quarter, C2ER releases a Cost of Living Index that analyzes the prices of housing, utilities, health care, transportation, groceries and miscellaneous goods and services in cities across the United States to determine how each metropolitan statistical area compares to the national average.
In order to investigate how home values have changed in the last decade, we compared the data that C2ER collected for the second quarter of 2019 to the data they collected for the second quarter of 2009. Since C2ER acquires data from the chambers of commerce (or similar organizations) of the cities that are willing to participate each quarter, the number of cities included varied from 2009 Q2 to 2019 Q2.
Home value is a relative measure that is directly determined by how much buyers are willing to pay for property at a specific point in time. This means that the best indicator of home value is an area’s median home price. Therefore, to determine each city’s home value, we analyzed C2ER’s data on median home prices.
Real Estate Market Trends: 2020
Let’s take a look at the real estate market trends of 2020 thus far. We headed into the year, before the pandemic, with some solid housing market predictions for 2020. For example, we predicted that interest rates would remain low, prices would continue to slowly rise, and the housing market would improve.
Following the Federal Reserve’s decision to cut interest rates for the third time, we expected interest rates to remain low. Aside from this policy change, we also made this prediction by evaluating market forces such as the trade war with China and Brexit with Britain.
Because of these geopolitical events, there is volatility in the marketplace which works to keep interest rates low.
We also utilized current trends and statistics to predict that home prices would rise, but at a slower rate. One of the main reasons why housing prices have increased so much over the years is because of a lack of available housing inventory for buyers.
We predicted that in 2020, this would improve, at least moderately. While most Gen Xers and baby boomers are choosing to stay in their homes for longer, more builders are starting to build starter homes and more millennials are searching for their first homes.
However, regardless of our predictions for 2020, these trends are changing due to the spread of COVID-19.
Real Estate Trends Amid COVID-19
When evaluating the real estate market trends before and during COVID-19, it’s important to take a look at what has changed since the beginning of the year. The federal government’s shutdown of nonessential businesses put a hold on most real estate transactions.
There are also many social distancing rules put in place that make real estate transactions even more difficult. Not to mention, there is a lot of economic uncertainty which is keeping people from buying houses.
Based on these changes in the economy and people’s lifestyles, there are declines in the number of newly listed homes, homes on the market and buyer interest. There are also signs that the housing market will continue to slow, despite the massive rate cut to 0%.
What To Expect For The Remainder of 2020
Moving forward to the remainder of 2020, what’s to come all depends on how long social distancing and concerns over spreading the virus remain in effect.
When looking at the real estate trends for the remainder of the year, Fannie Mae is predicting a 15% drop in home sales for 2020 over 2019 numbers. REALTOR®.com’s March housing data release already shows that the year-over-year decline in inventory softened, the number of new listed properties declined and house prices dropped.
The more financially strained homeowners are, the more houses will be put on the market. Buyers who have been able to work from home will likely benefit from these low prices.
These trends are likely to continue for the remainder of the year, with a fall in home prices through the end of 2020. Prices are expected to recover in 2021, but that is dependent on how 2020 ends.
The Bottom Line
Ultimately, it’s important that you’re reminded of the previous real estate market trends as we move further into 2020. You should also be aware of the real estate market trend predictions of 2020, and evaluate how COVID-19 is affecting and will continue to affect these trends.
If you’re looking to buy or sell a home in the upcoming year, make sure to stay informed about the home buying and selling process every step of the way.
Article from: https://www.rockethomes.com/blog/home-buying/real-estate-market-trends