Homeowners experienced a wild ride over the past decade. Ten years ago housing prices were down nationwide, then recovered and surged ahead.
“It has, in fact, been the most consequential stretch in American real estate history, one that has fundamentally altered the landscape,” according to a new report from Realtor.com®. “Cosmopolitan coastal cities are out; affordable midsize cities are in. Baby boomers and Gen Xers are no longer the dominant forces in buying, ceding that turf to millennials,” says the report.
Forces include a lack of homes for sale, which could reach historic lows next year. On the positive side, mortgage rates are expected to remain low.
Here are the biggest factors expected to shape the national real estate market in 2020.
The big need in real estate is homes that more people can afford, especially as millennials become America’s main home buyer. But after a long period of rising prices, a growing number of buyers can no longer afford today’s homes.
Prices are affecting where people choose to live. “Many people would prefer to live in San Francisco and [other] big cities, but for the right price they will make the decision to go to another city,” says Danielle Hale, chief economist at Realtor.com.
Texas, Arizona and Nevada are likely to receive people priced out of California. Buyers in Northeastern markets will continue to look for more affordable homes in the Midwest or Southeast.
For Colorado, this trend isn’t new. In recent years, the Denver metro area has seen a steady influx of newcomers looking for jobs, booming economy and attractive lifestyle. These new Coloradans converged on the state from points West, Midwest and Northeast.
Millennials step up to buy
As the largest cohort of millennials turn 30 in 2020, they enter the life-phase when people tend to think of buying their first home. The oldest millennials will be turning 39.
This trend debunks the truism that millennials don’t want to settle down. As they grow older and start families, millennials shift toward home owning instead of renting, according to Hale. With such a large group entering the home buying phase, they will face much competition from roughly 71 million of their peers nationwide. Couple that with a scarcity of homes, and it’s clear millennials face a home ownership challenge.
Homeowners stay put longer
In a separate trend, Gen Xers and Boomers won’t be moving on from their homes just yet.
“Boomers are living longer, healthier lives and staying in their houses longer,” reports Realtor.com.
Many Gen Xers are still raising kids or not ready to retire, so unlikely to move.
Boulder reflects that trend. “The county is aging rapidly,” reports the annual Trends Report published by Community Foundation of Boulder County. Not only are more Boulder citizens growing older, families struggle to find affordable housing. And the inventory of homes for sale in the area tends to be low.
How to buy and sell homes in 2020
If you want to buy an entry-level home in 2020, the going may be tough. Buyers should get in position to act quickly by getting pre-approved for a mortgage loan and being mentally prepared for a long search.
For sellers, if your home is entry level, plenty of would-be buyers will compete for your home. Your home sale will likely be quick. Sellers of more expensive properties may experience a longer wait.
Boulder County has seen a hot and healthy market for the last several years. The local market is likely to remain highly desirable, but with prices high, home sellers who ensure their home is in pristine condition and presents well through decluttering and staging will find the selling process is easier.
A Realtor who is knowledgeable about the local market is a great asset in Boulder County’s competitive real estate. For best results, arm yourself with someone you trust.
See the Trends Report: commfound.org/trends.
By Tom Kalinski. Tom is the broker/owner of RE/MAX of Boulder, the local residential real estate company he established in 1977. He was inducted into Boulder County’s Business Hall of Fame in 2016 and has a 40-year background in commercial and residential real estate. For questions, e-mail Tom at email@example.com, call 303.441.5620 or visit boulderco.com.