A Redfin report forecasted an imbalance in the housing market for 2020, with more buyers vying for fewer available houses for sale.
This tipping point signals a strong housing market in 2020. With the growing shortages of homes for sale, homebuyer demand is skyrocketing, resulting in similarly skyrocketing home prices. In fact, according to Redfin, this rise in home prices is up-ticking at one of the fastest rates in decades.
With this current state of affairs, it seems like winter 2020 has been met with two quite contrasting reactions: buyers are racing to heat things up, while sellers seem to be embracing the freeze mentality. Such a dichotomy has only fueled the competition in the housing market, setting the stage for an intense 2020 race for homeownership.
Redfin CEO Glenn Kelman remarked on the timing of this high housing demand, attributing much of it to its coinciding with the timing of the Super Bowl weekend, which he once called “the weekend where the housing market either goes crazy or it takes a nap.”
Regarding more specific data on the schism and how the housing supply is not presently keeping up with the demand, recent data supplied by the National Association of Realtors revealed that December’s housing inventory actually dropped to its lowest level in two decades, bottoming out at a mere 1.4 million units available for purchase.
Redfin Chief Economist Daryl Fairweather summed up the present state of the market simply with a positive statement that should give us all confidence moving into 2020: “With every new release of data this year, I’m becoming more and more confident that demand will be strong in 2020—just as strong as, if not stronger than, in 2018 and 2017.”
Fairweather then pointed to supply is the main factor that will cause any shifts in the status quo: “The big question for the housing market this year is supply. Will homeowners sit on the sidelines, content with their refinanced loans, or will they want to get in on the action too and move up, move down, or cash out entirely?” Heading into 2020, we’ll be watching.
More bad news for buyers came this week as the S&P CoreLogic Case-Shiller Index found home-price appreciation rose in November 2019 to 3.5%—the fastest rate since April 2019.
Both the 20-city and 10-city composite indexes saw gains in their 12-month growth rates, but growth was slower than the national index for the month at 2.6% and 2%, respectively.
Phoenix reported a 5.9% monthly increase in home prices—more than any other metro on the index.
The National Association of Realtors reported Wednesday that its Pending Home Sales Index fell 4.9% in December. Year-over-year contract signing rose 4.6%.
“Mortgage rates are expected to hold under 4% for most of 2020, while net job creation will likely exceed two million,” said Lawrence Yun, NAR’s Chief Economist. While he noted that these factors are promising for the housing market, Yun cautioned that low inventory remains a significant longer-term concern.
Every region posted a decline in December: the Northeast (-4%); Midwest (-3.6%); the South (-5.5%); and the West (-5.4).