Find properties with the highest ROI using a new free tool, FlipScout.

Real Estate Investing In 2020 and Beyond – A Look Inside Home Buyers and Sellers Minds

Reading Time: 3 minutes

By the end of this year, millennials will number 73 million, a number larger than any other living adult population. It’s this generation that is expected to be the biggest driving force pushing the housing market forward in 2020. Large groups of millennials entering the market are now either purchasing their first home or trading up for bigger properties as their families expand. Millennials buyers will keep demand for homes robust next year, particularly for entry-level properties. 

Read on for what home buyers and sellers can expect from the long-term outlook for home sales in 2020.

Outlook for Buyers

2019 saw notable growth in buyers across the US due to the vast number of millennials entering the real estate market. These buyers, going into 2020, will benefit from the minimal projected home price increase of 0.8% and comparably low-interest rates. It has been relatively easy for these buyers to qualify for a home loan in 2019, but the absence of supply in housing will make finding a property a more difficult task than finding financing in 2020. This will put some strain on buyers looking to purchase a home at the entry-level, and drive individuals towards the rental industry.

The minimal supply of housing is not expected to increase any time soon. The majority of new construction in 2019 was limited to more luxury and high-tier housing, but projections are that the construction of single-family homes will increase in 2020.

Outlook for Sellers

Sellers dealing in higher-tier housing are assured good returns throughout 2020. As these investors are more in tune with the conditions of the local market, they will greatly benefit from the ongoing demand for luxury homes. The sales of existing homes are expected to amount to nearly 1.8% in 2020, a slight increase from the previous year. 

McMansion-style homes will continue to remain unpopular with buyers, seeing listings stay on the market for longer and forcing sellers to capitulate to lower prices. This is attributed to a shift in the main demographic of buyers to include those under 40, who are preferring smaller, cleanly designed and minimalist style homes.

Easing Recession Worries

There has been some speculation of an upcoming recession but data shows this will be unlikely in 2020. The news isn’t all positive – certain markets, including real estate, will soften somewhat as consumer spending slows down. This shouldn’t slow down millennial buyers too much however, as they are predicted to account for almost half of all mortgages across the country and will continuously move housing inventory.

A recession is considered unlikely as around 5 million millennials will turn the age where most purchase property for the first time in 2020, while the older millennials in their late thirties are upgrading to bigger family homes. This combined influx is set to keep the housing industry afloat for a while longer.

2020 Potential And Challenges

There has been a resurgence of appreciation in housing prices over the past year, and the average American is spending more years in their home – up to 13 years without moving. There will be a lot of potential found in the rental property market, for which demand will remain high in 2020 as home prices increase. Rental homes will be the option of choice for individuals priced out of buying in their local markets, although rental prices are also showing a yearly increase.

The most significant challenges for individuals entering the real estate market in 2020 will definitely be affordability and the lack of supply.

Millennials will be the major driving force keeping a housing recession at bay in 2020 in both buying and renting markets. Buyers can look forward to seeing minimal increases on home prices in the next year, and benefit significantly lower interest rates. Sellers, on the other hand,  will want to refocus on what the target demographic of the market is looking for – putting more emphasis on the single-family home with a modern touch rather than unpopular McMansion style homes.

The predicted long-term outlook for real estate in 2020 is largely positive, offering new opportunities for those priced out of traditional markets.

Share on facebook
Share on google
Share on twitter
Share on linkedin