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Where is the housing industry heading in 2020? According to Fred McGill, co-founder & CEO of SimpleShowing, we are heading toward a boom. But don’t worry, he says. Unlike last time around, this growth will not lead to an economic downturn. Instead, the housing industry will see stable growth bolstered by Millennials jumping into homeownership amid rising rents. Additionally, Baby Boomers will start moving again, creating an opening for including more aging-in-place designs. Still, despite increased construction activity and Boomers’ homes returning to the market, McGill expects the prices of homes to continue to rise and gentrification to increase in pace, which could deepen socioeconomic divides.
In 2019 we saw interest rates drop, housing inventory remain low and hot markets continue to heat up. Will those trends persist in 2020? Will home sales remain stagnant in the new year? Will an influx of new housing inventory come onto the market? Will younger consumers stop renting and start owning?
Here are five predictions that are likely to shape the 2020 housing market and help us answer these questions and more:
1. Rising rents will lead to more millennial buyers.
Contrary to widely held beliefs, most millennials actually do want to own homes as opposed to renting apartments. In a Chase Home Lending study, 70% of millennials surveyed said they would be willing to cut back on activities like spa trips, shopping and going to the movies to save money for a home purchase. That says a lot for this generation.
One major factor that's been holding millennials back from homeownership is an inventory constraint issue in the hottest markets. It has become increasingly difficult to buy a home in cities like Nashville; Austin, Texas; and Raleigh, North Carolina. In those cities, job growth has outstripped housing, leading to a sparse housing supply below the $300,000 price point. While young buyers in these markets possess the job security and earning potential to purchase homes, not enough good housing options exist at their price point. This has led to crowds of buyers waiting on the sidelines in 2019.
