So far, 2020 hasn’t been the year we’ve been expecting in more ways than one. The most apparent event plaguing the world is the coronavirus pandemic, which is forcing millions of people across the world to quarantine and stay at home. This change in our daily operations has had a major impact on economies in countries in every corner of the globe, including the U.S. Companies had tough decisions to make, such as laying off workers, transitioning to remote work, or closing their doors for good.
This economic shift has impacted the housing market, which means buyers and sellers are in a unique situation compared to years past. Whether you’re looking to buy or sell, it’s important to understand the current state of affairs in the housing market. Take a look at all you need to know about the 2020 buyer and seller’s market below.
Most homebuyers take out a mortgage in order to pay for their house. Mortgage lenders make most of their money by charging an interest rate, which can cost buyers more money over the course of their loan. Most buyers look for mortgages with low interest rates, as this typically means they’ll have to spend less money on their home. Due to the current housing market conditions and economy, mortgage interest rates are at the lowest they’ve been in seven years, dropping to 2.6 percent in June 2020 for 15-year fixed-rate mortgages.
So, why do low mortgage interest rates affect buyers? Because it means you’ll spend less money on interest over the course of your mortgage. Homes are one of the most expensive purchases you’ll make in your life, which means you most likely won’t have a few hundred thousand dollars on hand to pay in full right away. If you take out a mortgage with a high interest rate, you’ll be spending more money.
If you already have a mortgage, you may want to consider refinancing to get a mortgage with a lower fixed rate. Doing so can get you a new term and interest rate that can save you money.
Low interest rates are important for sellers, too. Because interest rates are so low, more buyers might be willing to buy a home before interest rates begin to rise. So, with more people looking to take out a mortgage to finance a home, you might be able to sell your home for more money due to an increase in demand. However, it’s important to keep an eye on these interest rates. Once they begin to rise, you may end up having your house on the market for a longer period of time.
Millennials are adults that are aged anywhere between 23 and 39 years old in 2020, which means they were born between 1981 and 1997. This generation is much different than previous generations, such as Baby Boomers and Gen Xers. There are plenty of reasons why Millennials are different than generations older than them, such as having unsurmountable student loan debt, dealing with higher costs of living, and facing a tumultuous economy. This has resulted in Millennials delaying marriage, living with their parents longer, and delaying homeownership.
Why does this matter? Take a look below.
If you’re a Millennial looking for a home, it’s safe to say you’re going to have some competition, especially if you’re looking in cities and suburbs. As you head into the market, make sure you have a list of wants and needs. While wants are nice to have, it’s important to make sure your needs are met first, such as proximity to public schools and your place of employment, rather than having a pool or a finished basement.
Along with knowing what you want, consider getting the help of a real estate agent. They can do all of the hard work for you by finding a home that meets your needs and negotiating a fair price.
Millennials grew up in the age of information. It was during their time in which the internet was invented, and mobile communication took off. Today, they’re virtually all online, which means you need to put your listing up on the world wide web.
Posting your home on popular sites like Zillow and Trulia will be seen by more buyers, which means you’ll get more offers. You also want to make sure you include plenty of photos with your posting because, in the age of Instagram, appearance means everything. According to the National Association of Realtors 2020 Generational Trends Report, it was found that 98 percent of Millennials use the internet to search for a home, with 78 percent of them using a mobile device.
The price of homes is one of the biggest factors when it comes to selling and buying a house. With social distancing in place to prevent the spread of COVID-19, along with high unemployment rates, fewer people are looking for a home. In fact, Fannie Mae is predicting a 15 percent drop in home sales in 2020, compared to 2019, which results in low home prices. Here’s why this matters for buyers and sellers this year.
Low home prices matter for buyers because they mean buyers will spend less money on a home. However, this doesn’t mean you should jump the gun and buy a new home just to get a good deal. As stated, buying a home is pretty expensive. If you’re a buyer, make sure you have at least 15 to 20 percent saved up for a down payment, and continue saving until you can afford a home without accruing too much debt. This means you may need to sacrifice some of your wants and focus on your needs.
If you’re looking to sell your home, you’re probably not too happy about low home prices. This means you might not get what you’re asking for, resulting in a loss of money. If you can, you may want to consider waiting for home prices to creep back up to put your home back on the market. Or, you may have to bite the bullet and settle for less.
The year of 2020 is filled with economic uncertainty, which is having a major impact on the buyer and seller’s market. With social distancing measures in place due to the coronavirus pandemic, real estate transactions are becoming more difficult. Additionally, people’s lifestyles are changing, which is resulting in fewer homes on the market. Whether you’re a buyer or a seller, it’s important to keep these real estate market trends in mind to ensure you’re making the right decision.
Suzanne Pope is the COO for Whiterock Locators, an online apartment location service in the Dallas/Fort Worth area. Suzanne has been a real estate professional since 2007 and a licensed real estate agent since 2010. She has worked for both clients and investors who are buying and/or selling a home.
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