Been thinking of buying a home but not sure what the new year has in store? It’s definitely important to know where the market’s headed before you decide to invest (or sell) real estate, so here’s what you need to know about buying a home in 2020.
Interest rates will stay low
Great news for you! Interest rates have been pretty darn low this past year (much lower than they were leaving 2018)—and they’re actually expected to stay low. In fact, Freddie Mac and the Mortgage Bankers Association predict rates could drop as low as 3.5%, lower than the current 3.75%.
Prices, however, will continue rising
In 2018, home prices across the US skyrocketed. Coupled with also-high interest rates, these soaring values pushed many hopeful buyers out of the market. In 2019, that rising number continued to increase—but at a much slower rate. In 2020, prices are expected to continue their upward climb, though decidedly without the vigor of 2018’s hikes. In fact, some experts predict climbs of only about 2.8% or so.
Inventory will stay low
Inventory—that is, the number of homes currently for sale on the market—has been quite low for the last few years, causing prices to skyrocket. An influx of new construction has helped alleviate the problem in some areas, but there’s still a lot of tight competition amongst buyers for desirable and well-priced homes.
You’ll need to be a competitive buyer
Low inventory means competition. Competition means potentially being turned down by a seller for a better offer or one from a more qualified buyer. If you want to stack up against the competition, you’ve got to stand out from the crowd a little. There are two key ways to do this.
- Get prequalified. An official statement from a lender documenting exactly how much they’re willing to lend you is a great way to show sellers that you’re serious about your offer—and you can financially support it.
- Try a buyer’s letter. A unique way to stack up against the competition, particularly if you’re unable to make a higher offer, is to use a more personal approach. By writing a letter that gives some details about yourself and why you love the home, you appeal to the human side of the transaction, helping you stand out from a bunch of numbers, dollar signs, and dates.
The suburbs will be hot
If you’re thinking of buying a home in a quiet, convenient, and affordable suburb, you won’t be alone. Because millennials (those born from roughly the early 1980s to the early 2000s) make up a large portion of the buying market, there’s been a high demand for convenient and affordable suburban communities—ones with easy access to amenities and public transportation. (Like New Albany!)
Your agent will matter. A lot.
Hot competition and high prices mean you’ve really got to be on your real estate game if you expect to get the home you want at a price you can afford. Easiest way to do that? With an experienced local real estate agent.