Redfin, an online, map-based real estate brokerage that makes money when users buy or sell homes with its real estate agents, projects the housing market to heat up in 2019. Redfin anticipates interest rates to invigorate the market by remaining low at approximately 3.8%. Redfin also anticipates that continuing dwindling inventory will drive increased buyer competition for fewer buying options.
Daryl Fairweather, Redfin’s chief economist, said, “Low mortgage rates started to revitalize the market at the end of this summer but we won’t see the full impact on that demand for housing until next year. In 2020, buyers will have fewer homes to choose from than they have had in five years…the (more than likely) return of bidding wars is good news for sellers who may have been holding out this year as the market stabilized.”
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Redfin anticipates one in four offers will face bidding war competition in 2020 compared with one in ten offers in 2019. Increased bidding wars will then likely push up prices to +6% during the first half of the year. In the first half of 2019, price growth hit +2%.
What could increased competition and faster price growth mean for the housing market in 2020?
- More homeowners and builders may list their homes.
- There could be an improvement in the balance between supply and demand by the end of 2020 if more homes were listed for sale.
- Price growth could begin to moderate at +3% with more houses listed for sale.
- An increase in bidding wars to 1 in 4 offers in 2020 compared to 1 in 10 offers in 2019.
Cities in which economies and jobs are growing could, however, continue to outpace home price appreciation growth in 2020. For example, Charleston saw an annual increase of + 104% in the number of real estate users looking to move during Q3 2019. Charlotte, due to the expansion of Microsoft’s campus in the metro, saw an annual increase of +44% in real estate lookers.
Thanks to HousingWire’s Alcynna Lloyd for source material.