What You Can Expect When Buying a Home in 2020Return to Blog
If you’re planning to buy a home this year, you should expect to have a lot of company. More millennials are expected to enter the housing market to become homeowners in 2020 as mortgage rates remain at a relatively low level. This new decade brings forth strong possibilities of their home-buying issues in 2019 being alleviated. Here are some key trends experts anticipate you may face this year, and how they could affect your homeownership plans.
The quantity of new home loans going to first-time homebuyers is estimated to rise to 8.3 million throughout the following three years, beginning in 2020. That is a 700,000 leap from the past three-year time frame, as reported in a recent analysis by TransUnion. Experts believe there will be growth in spite of limited starter-home supply. In fact, TransUnion’s Senior Vice President, Joe Mellman states “We’re actually anticipating interest rates will stay low, unemployment at an all-time low, and real wage growth over inflation will be positive.” In any case, with more buyers interested comes with more competition for the home you want. There's no assurance each homebuyer will discover a new home, and when you do, you might be competing against other offers.
Here are some tips to stand out above the offers of your competitors:
- Be prepared before submitting a bid on a house, and include your pre-approval notice. Not having the proper documents ahead of time could delay the bid process, and could possibly destroy your chances at winning the home.
- If allowed by your state, add something personal like a family letter with photos. This can add an emotional touch and help you stand out.
More mid-range homes
Homebuilders will create more mid-range homes this year, which could help more seasoned Millenials bypass the entry-level home completely and remain in their spending limits. The availability of the new mid-ranged homes could also flow downward to help first-time home purchasers. These new homes could lure some more established millennial homeowners to sell their smaller homes valued at $200,000 or less, which would be ideal for those entering the housing market to become first-time homebuyers.
Consider contacting Advent Properties’ Darryl Glass to discuss your homeownership plans, and get connected with a mortgage professional to see if your budget can buy a mid-range home. Call Darryl via. phone (510) 500-7531 or email firstname.lastname@example.org. For buyers who may not be in the best position to afford mid-range homes, consider more affordable homes that aren’t necessarily brand new and may need low maintenance repairs.
Prices will keep going up
Housing prices will continue to climb, contributing to a “seller’s market” again in 2020. Home costs have steadily grown since reaching record-breaking lows in 2012, as per the S&P/Case-Shiller U.S National Home Price Index. A great part of the value appreciation as of late can be a direct effect of a decline in available homes to be purchased. More foreign buyers, private equity firms, and REIT investors have bought single-family homes, prompting a decline in housing stock for first-time home purchasers.
Something you should keep in mind is as housing prices increase, maintain lower expectations when you’re planning to buy. Some of your housing must-have’s may need to be reevaluated to stay competitive in this buying market.
Worries about a slowing economy may keep some millennial homebuyers uninvolved this year. More than half of millennials (56%) are concerned about a recession occurring, the most significant level among any generation, as indicated by an ongoing report by Allianz Life. With this in mind, should you consider delaying your home purchase? A recession should not keep you away from becoming a homeowner, mainly because if one occurs, it will not be as severe as the last one in 2008.
Last year for easier mortgages
A temporary fix that made it simpler for borrowers with more debt to get a mortgage loan sponsored by Fannie Mae and Freddie Mac is set to end in 2021. A year ago, the fix known as the QM fix represented 16% of all mortgages, as indicated in a report by CoreLogic's Pete Carroll. In another report by the Urban Institute found that the fix greatly helped minority and low-income borrowers meet all requirements for a home loan. This implies that purchasers with a high debt-to-income ratio may want to purchase now before the fix expired.
But what if you can’t buy now? There are two options for those who can’t qualify for traditional mortgages, improve your credit score and/or consider local programs that serve low-to-moderate-income areas. Programs available for these areas include the Capitol Federal Closing Costs Assistance program, which awards buyers a grant of up to $1,500 for closing costs associated with home purchases.
Alternative choices are loans backed by the Federal Housing Administration or the Department of Veterans affairs. These permit a lower upfront installment as low as 3.5%, in return for a higher loan cost. Even those with a credit score as low as 500 can qualify for these loans.