The 2019 US housing market has largely been characterized by low supply and high demand, especially for the lower-priced houses.
But should we expect the same next year? Industry experts say, yes and no.
Forbes recently spoke to mortgage, real estate, and housing professionals and here’s what they had to say:
Property prices will remain on the rise
Thanks to high demand coupled with limited inventory, the prices of homes are expected to keep rising, according to experts.
A recent forecast by CoreLogic, property data firm revealed that home prices are set to tick up by 5.6% by the end of next year’s third quarter, up from this year’s 3.5% jump.
Daryl Fairweather, who is the chief economist for real estate brokerage Redfin said, “Right now we aren’t seeing a ton of new listings. Without more listings coming on the market, there will be more competition starting off in early 2020 and that will lead to more price pressure.”
And it may get worse at the lower end of the price spectrum. As Ralph DeFranco, chief economist for mortgage insurer Arch MI, explains, “Low-interest rates and a shortage of starter homes will continue to push up prices,” he said adding “this is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry-level homes.”
The rising property prices will highly likely go past next year, with no current market surveys predicting a drop in property prices any time soon.
Expect tight inventory
Experts predict tight housing inventory for the entire 2020, majorly caused by record-high homeownership tenures and interest rates. A report by Redfin shows that on average, a homeowner stays in their house for 13 years, up from 2010’s 8 years. But depending on the city, homeownership tenures can go as high as 23 years.
“You can’t buy what’s not for sale,” says Kushi. “While historically low rates increase buying power and make it more likely for potential buyers to attain their homeownership dream, they also increase the risk of a long-run housing supply shortage, which we predict will continue through 2020 and possibly intensify. As first-time buyers lock-in these historically amazing rates and existing owners refinance—in droves in recent months, everyone will stay put and not sell. Where’s the incentive?”
Limited inventories could ease up if construction increases. Data from Census Bureau on residential construction revealed that building permits and housing stats had both increased this year. The National Association of Home Builders reports also indicated that builder confidence was at a 20-month high.