A new month, new year and new decade is upon us. Resolutions have been made, goals have been set and the excitement for the adventures of 2020 abound. What lies ahead for the real estate market in 2020? While there is no proverbial "crystal ball" swirling with the answers of what's to come, there are some key indicators of another strong year ahead.
A driving factor in predicting a strong real estate market in 2020 is mortgage rates. Experts at the National Association of Realtors, the Mortgage Bankers Association and Freddie Mac are all forecasting that mortgage rates will remain stable, hovering in the 3.85% range. Stability in interest rates creates more affordable lending options for buyers looking to purchase in the coming year. As history has demonstrated, we are in a time of record low lending options. As an example, the average rate in the 1980s was 12.7%, 1990s at 8.1% and 2000s at 6.62%. The Fed has indicated no hurry to make adjustments in 2020, as job gains have remained solid and the labor market in a strong position. All of this points to opportunity for buyers to step into the market.
Home sales are forecast to continue to rise but at a much more moderate pace. It's been no secret that housing inventory has been an issue. In 2019, Bend's real estate inventory remained incredibly low, with an average 2.5-month supply. Supply is projected to remain tight in 2020—hence the moderate pace of sales growth in the coming year.
Home prices are also forecast to rise. Much like home sales, prices are forecast to rise at a more moderate pace. Many experts, including Matthew Gardner, chief economist for Windermere Real Estate, forecast that home prices will increase about 3.8%. He attributes this gain to the stability of low interest rates and more first-time homebuyers entering the market. Gardner also expects this growing number of first-time homebuyers to be a significant factor in the growth of the real estate market as a whole.
In the coming year, affordability will remain an issue, specifically in certain markets— Bend, Oregon being one of them. Year after year we've experienced significant increases in pricing. Bend began to see a trend midsummer that pointed to more moderate pricing growth, indicative of the more moderate price growth in the coming year. In years past we've experienced a seller's market; this trend of moderate price growth will help to bring it to a more neutral market, leading to a stable real estate market overall.
Things are looking good and it appears as though we're going to experience another healthy and solid real estate market for 2020. This bodes well for both buyers and sellers. Cheers to the new year and new possibilities!
