While prospective homebuyers have battled low inventory, high entry-level prices and economic uncertainty in 2019 – unfortunately for both buyers and sellers – experts expect conditions will remain largely the same next year.
The total number of available homes for sale could even hit a record low, according to a new forecast from Realtor.com, particularly in the first-time buyer’s market. Accordingly, overall U.S. sales are expected to fall by 1.8 percent.
"Real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting," George Ratiu, senior economist at realtor.com, said in a statement. "2020 will prove to be the most challenging year for buyers, not because of what they can afford, but rather what they can find."
Sellers, too, will experience trouble, save for those in the entry-level market, researchers predict. Prices in the entry-level market will be buoyed by consistent competition – though the same can’t be said for the upper-tier market.
On the plus side, price appreciation is expected to be moderate.
Overall, Realtor.com expects home prices to rise just 0.8 percent across the U.S. next year – with declines occurring in 25 percent of the 100 largest metro areas.
Mortgage rates are also expected to remain reasonable, averaging 3.85 percent.
Demand in the entry-level market will be driven by an uptick in Millennial activity – as those born between 1981 and 1997 are expected to account for more than 50 percent of all mortgages by springtime.
And the shortage of inventory will be exacerbated by the behavior of Baby Boomers, who are expected to remain reluctant to sell in the coming year.
Deutsche Bank Research put out a note on Wednesday that showed the median age of U.S. homebuyers is currently 47. That compares with 1981, when the median age was 31. A combination of factors, including tighter lending standards, an aging population and growing student debt levels has contributed to that trend, researchers said.