Zillow just released its forecast for the 2020 housing market and this forecast, like most others, is strikingly similar to the realities of the 2019 housing market…low interest rates, robust buyer demand, a strong economy and slowing home price growth.

Skylar Olsen, Zillow’s director of economic research, said, “With the housing market stabilizing from the drama of the price recovery and the slowdown during 2019’s home shopping season, we have a rare moment of calm to reflect on what housing might look like in the year to come. If current trends hold, then slower means healthier and smaller means more affordable…consumers will continue to absorb available inventory and the market will remain competitive in much of the country.”

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Zillow sees mortgage rates stabilizing at 3.8% in 2020, much like 2019’s rates of 3.6%-3.8%. Such relatively low rates point to stronger buyer demand in 2020 despite affordability issues in expensive markets continuing. And because lower rates do NOT compensate for upfront high down payment requirements, buyers will pursue smaller, cheaper, secondary markets and/or more affordable suburbs on the fringes of their current cities.

Zillow, like other industry forecasters, predicts home value growth to slow to 2.8% y/y. This 2.8% home value growth prediction is a good 1.9% decline from 2019’s current home value growth.

Continuing low inventory levels will not impede strong sales growth into 2020, according to Zillow thanks to the influx of the large Millennial generation reaching the peak age of home buying.   Not only will Millennials buy homes, they will also determine housing trends such as…

  • Smaller, more affordable homes
  • Shrinking square footage demands
  • Walkability and proximity to urban amenities such as public transit and entertainment/restaurants/shopping

And, “fun will return to home design…bold prints, lively wallpaper, brightly hued walls…” plus unexpected splashes of color in kitchens, appliances, fixtures, interior doors and moldings.

Importantly, Zillow does not forecast a recession in 2020 due to strong jobs creation, steady wage growth and continued consumer spending.

Thanks to InmanNews Marian McPherson for source data.

Also read: “Aging in Place” Cutting into Senior Living Developments, 8.3M First-Time Buyers On Their Way into the Market, Podcast: “Tim and Julie, please HELP!?…My Deals Are Blowing Up…I Need Help NOW!”