A Look at the 2020 U.S. Housing Forecast

20일 전

Time flies when you are investing in real estate, right? So here we are just over a month away from 2020. Makes me wonder what next year will bring so I decided to dig into some forecasts collected by good ol' Fannie Mae.

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Themes of the 2020 Housing Forecast

1.) Rates Stay Low

Based on the Fannie Mae study, expectations are for 30-year mortgage rates to remain low and even push slightly lower with rates sitting around 3.5 to 3.6 percent for the year. If the prediction comes to fruition that will be a lower average than both 2018 and 2019.

2.) Housing Starts Slow Throughout the Year

Expectations are that housing starts will slow through the year, being strongest in Q1 and easing up each quarter with Q4 being forecast to have the slowest rate at 1.25 million starts on an annual basis.

Note to investors: the biggest decline is in construction of multifamily property (two units or more), with a 5.6 percent year over year decline to 364,000 being forecast for 2020.

3.) Existing Home Prices Start of Strong But Slide In Second Half of Year

Home prices are expected to rise from Q1 to Q2 next year, topping out with a median price of 291K. However, a price decline is forecast for Q3 and Q4 with the median price finishing the year at 279K.

Takeaways and Conclusions

Looking at this data, which you can find here, I see a couple possible things....

The slowdown in multifamily construction may lead to continued price pressure in that segment as more and more investors chase fewer properties, especially while interest rates are still low.

Home builders may be taking a wait a see approach for Q4. With expected builds falling in all categories for Q4 - I would guess builders are easing up a little as the political landscape is an unknown at this point.

In addition to that, rates being cut (during a time of economic expansion) have only juiced the market even more coming into next year's elections.

The level of risk vs. reward doesn't seem like a super positive proposition at the moment given we are roughly 9 years into an appreciating housing market.

This is yet another reason I love rental properties. Buy right and cash flow - less worries about what the market does.

If you are new to investing and want to learn how to buy right better check out the ScaredyCatGuide to Investing in Rental Properties Video Course or give the book a read.

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I am with Jerald Celente that interest rates will go towards zero next year, and maybe negative.

This will undoubtedly have people looking for assets with all that free money.

The demand for houses however is dropping.
besides the homeless crisis, we are also seeing the number of babies born drop below replacement.
Further, we will start seeing boomers forced to sell homes.

So, will we see deep pocket firms buy houses and keep them off the market?
Or will we see a slow steady slump?

My bet is on a precipitous fall due to the economy not supporting current house prices, even with almost free loans.

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Yeah, its going to be a paradox we haven't seen before!

I need my house to appreciate a few percentages more so I can get the payment I need. Once I am at the payment I can easily afford, the market can do whatever it wants!

That is until of course, I am ready to buy my next one.

I like the advice, buy right, and have the rental income do its thing. I would love to own 5 properties, one for myself and one for each of my kiddies.

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Or one 5 unit property that brings income for all! ;-)

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