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The 2020 Real Estate Projections That May Surprise You

01/13/2020 by Noelle Cummings Leave a Comment

2020 should be an exciting year for residential real estate. However, with a presidential election taking place this fall and talk of a possible recession occurring before the end of the year, predicting what will happen in the 2020 U.S. housing market can be challenging. As a result, taking a look at the combined projections from the most trusted entities in the industry when it comes to mortgage rates, home sales, and home prices is incredibly valuable – and they may surprise you.

Mortgage Rates

The 2020 Real Estate Projections That May Surprise You | MyKCM

Projections from the experts at the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac all forecast mortgage rates remaining stable throughout 2020. Since rates have remained under 5% for the last decade, we may not fully realize the opportunity we have right now.

Here are the average mortgage interest rates over the last several decades:

  • 1970s: 8.86%
  • 1980s: 12.70%
  • 1990s: 8.12%
  • 2000s: 6.29%

Home Sales

The 2020 Real Estate Projections That May Surprise You | MyKCM

Three of the four expert groups noted above also predict an increase in home sales in 2020, and the fourth sees the transaction number remaining stable. With mortgage rates remaining near all-time lows, demand should not be a challenge. The lack of available inventory, however, may moderate the increase in sales.

Home Prices

The 2020 Real Estate Projections That May Surprise You | MyKCM

Below are the projections from six different expert entities that look closely at home values: CoreLogic, Fannie Mae, Ivy Zelman’s “Z Report,” the National Association of Realtors (NAR), Freddie Mac, and the Mortgage Bankers Association (MBA). Each group has home values continuing to improve through 2020, with four of them forecasting price appreciation increasing at a greater pace than in 2019.

Is a Recession Possible?

In early 2019, a large percentage of economists began predicting a recession may occur in 2020. In addition, a recent survey of potential home purchasers showed that over 50% agreed it would happen this year. However, the economy remained strong in the fourth quarter, which has caused many to rethink the possibility.

For example, Goldman Sachs, in their 2020 U.S. Outlook, explained:

Markets sounded the recession alarm this year, and the average forecaster now sees a 33% chance of recession over the next year. In contrast, our new recession model suggests just a 20% probability. Despite the record age of the expansion, the usual late-cycle problems—inflationary overheating and financial imbalances—do not look threatening.”

Bottom Line

Mortgage rates are projected to remain under 4%, causing sales to increase in 2020. Moreover, with growing demand and a limited supply of inventory, prices will continue to appreciate, while the threat of an impending recession may soften. Thus, it looks like 2020 may be a solid year for the real estate market.

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Filed Under: Market Updates, Real Estate News

About Noelle Cummings

Raised in Walnut Creek, Noelle Cummings understands and appreciates the many unique benefits of living in the Bay Area - with its unmatched beauty, culture, shopping, and marvelous restaurants!

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Noelle Cummings
Realtor®/Realtist® | Cal DRE #01333246
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