What to expect if you plan to buy a home in 2020
If you’re planning to buy a home next year, you’ll have plenty of company.
More millennials are expected to jump in the market in 2020 as mortgage rates remain low. But some problems that plagued homebuyers in 2019 – namely a scarcity of homes for sale – may be alleviated, at least a little, next year.
Here are five key trends experts expect for the upcoming year and how they could affect your home-buying plans.
The number of new mortgages going to first-time homebuyers is forecast to increase to 8.3 million over the next three years, starting in 2020. That’s a 700,000 jump from the previous three-year period, according to a recent analysis by TransUnion.
“We think there will be growth in spite of limited starter home supply,” said Joe Mellman, senior vice president at TransUnion “We’re actually anticipating interest rates will stay low, unemployment at an all time low, and real wage growth over inflation will be positive.”
But with more buyers comes increased competition. There’s no guarantee every homebuyer will find a house. And when you do, you may be going against other offers.
How can you stand out?
Be prepared before submitting a bid on a house, said Shelly Walters, founder at Shelly Walters Realty Group.
“The whole package needs to be there, [including] the pre-approval letter from the bank and the relocation packet,” she said.
Not having the proper documents ahead of time could delay the bid process, and could possibly derail your chances at winning the home. Add an emotional touch, too, like family letter with photos – if allowed by your state – to help you stand out, she said.
“We have multiple offers that come in, and the seller will pick the one who told them they are a young family with a baby looking for a family home,” Walters said. “A letter will sometimes buy you a house, even if you have a lower price.”
More mid-range homes
Homebuilders will develop more mid-range homes next year, which could help older millennials skip the entry-level home altogether but still remain in their budgets, said George Ratiu, senior economist at real estate listing company, Realtor.com.
“This is good news because this is where we’re having a choke point this year,” he said.
The availability of more mid-ranged homes could also trickle down to help first-time homebuyers, Ratiu said. These new homes could entice some older millennials to sell their smaller homes – priced at $200,000 or less – perfect for those in the market for the first time.
What does that mean for you?
Check with a mortgage professional to see if your budget can buy a mid-ranged home without stretching too much. For those buyers who can’t afford mid-range homes, consider more affordable homes that aren’t necessarily new and may need repairs, Walters said.
“If you’re in a lower range, you can’t have a whole huge list going,” Walter said. “You’ve got to put some sweat equity in the house.”
Prices will keep going up
Housing prices will continue to rise, giving way to a seller’s market again in 2020, said Dr. Sean Hundtofte, chief economist at Better.com, an online mortgage lender. Home values have consistently increased since bottoming out in 2012, according to the S&P/Case-Shiller U.S National Home Price Index.