Real Estate in 2020
The biggest wave of new homebuyers will continue to be millennials. The majority of millennials are first-time homebuyers. But depending on where you live, you may see the youngest generation of adults breaking into homeownership as well. Members of Generation Z are born between 1996 and 2010. These are still too young to make up a significant portion of the homebuyer market.
We Expect Interest Rates to Remain Low
This will help new buyers obtain financing for their first home purchase. The Federal Reserve left interest rates unchanged in December 2019. The target range is 1.5% to 1.75% and noted its intention to keep rates as-is throughout 2020.
The Fed’s recommendation plays a role in mortgage interest rates. The interest rate lenders offer to homebuyers varies based on the individual and the market. On Jan. 2, the average interest rate for a 30-year, fixed-rate mortgage was 3.72%. We expect some fluctuation throughout the year. Daryl Fairweather is the chief economist for national real estate brokerage Redfin. He predicts mortgage rates will stabilize at about 3.8% this year. This is still low enough to encourage buyers to enter the market.
Low-interest rates aren’t just a helpful nudge for would-be buyers to consider your home for purchase. As you look to your next home purchase, you can likely secure a low-interest rate as well.
Have you been in your home for more than a couple of years? You’ve been building equity as the property value increases and you make consistent mortgage payments. The more equity you have in your home, the more profit you’ll likely see when you sell the property. You can use that for a larger down payment on your next house, other expenses or savings.
You may be hoping to step up into a larger home or a more desirable neighborhood. Significant equity in your current home can only help. This makes you a more desirable prospect to both mortgage lenders and home sellers considering offers.
There’s No Telling What 2021 Holds
Respondents estimate a 66% chance of a recession starting by mid-2021.
There’s no need to fear a massive housing crisis like the one that occurred in the last recession. That recession lasted from December 2007 until June 2009. Home values may dip during a time of economic uncertainty. Especially in areas where job loss is significant. Also, the number of foreclosures may increase during that time. But as long as you can continue making mortgage payments, you’ll be fine.
During a recession, you’ll be less likely to want to put your home on the market at a reduced price unless it’s necessary. Are you starting to feel the itch to move? Consider selling this year as opposed to next. Economic changes may make a home sale in 2021 less desirable.
Keep in mind, however, that you still have time in 2020 to make necessary updates to your home. Also, prepare for a move and find the right new property. Rather than putting it out of your mind, start preparing now.
Crossland Title, Inc.
Crossland Title Inc. is a Knoxville title agency providing full-service real estate title solutions. Crossland Title Inc. makes your closing seem effortless.
With more than 32 years of experience in the real estate and title business, owners Pam Rice and Beth Crox have built their reputations upon the virtues of personal service and integrity. They believe that reputation as an honest and reliable business is the recipe for success.
Also, be sure to follow us on Facebook!