It's 2020 - a new decade, a new market, AND an election year
I’ve never considered myself as much of a writer but I did get an A once in a college psych class so maybe that TA grading my paper was onto something! As I’ve grown up (ahem, aged), had a kid, and as my business has grown I’ve tried to become more thoughtful about real estate and the economy & business world as a whole. There is so much noise out there that often our understanding of what is really happening in our particular market can become convoluted.
As we kick off the 2020 spring real estate market I wanted to put my own thoughts out there to help clients and those that are real estate curious (shouldn’t all homeowners be?!) gain insight into what us real estate brokers that are in the trenches are experiencing day to day, week to week, month to month.
It’s amazing how many local news outlets (e.g. Crain’s) are out there talking about how slow the real estate market is. I get it, there is a trade war (hopefully winding down), political uncertainty, and the like but man, you want to see bleak? Talk to me 8-9 years ago!! That was BLEAK!
The “R” word occurs when there is a large unexpected negative event. Much of what is in the news is already “baked into” the market. Trade war, Brexit, and monetary policy are all out there in the open for all to analyze. None of the people far smarter than me are predicting a recession, just a slowing in growth. Note the word growth, we will still grow just at a slower rate, we are not talking about a shrinking economy. The stock market is high, consumer confidence is high, and unemployment low. I think we’ll see a continued strong market in 2020.
Interest rates have dropped again to ridiculous lows. If you haven’t already refinanced you might want to think about it. Shoot me a text if you need a recommendation. Rates have dipped considerably even since a year ago. This has and will continue to spur demand as a home a year ago versus today will cost you less every month.
Deals here locally are getting done without issue but perhaps with a slightly higher market time. Supply has increased while demand has dropped. We are talking a minimal amount. Here’s a chart of past 10 years median market time. It ebbs and flows but you can see we are still very low. The latest data is from Dec 2019 which saw an increase but I predict over the next 4-5 months market time and inventory will decrease with our typical seasonality and increase again as we get closer to the election.
What’s more, prices are increasing! They flattened out over 2018-2019 but we’ve seen a slight uptick over the past few months. Below are prices in the city of Chicago over the past 10 years. I think we’ll see pricing remain flat to increase over the next 12 months again with seasonality and flatten around the election.
Interestingly, after the 2016 election we saw one of the busiest Decembers ever so we could certainly see the market pop again after the election and into 2021.
Regardless, everyone’s situation is different, life happens, so we are here to consult you individually based on your needs and desires.
In summary, here are my predictions for 2020:
- It’s going to be a busy spring, the warmer weather in the first couple weeks of Jan helped jump start the market.
- Prices will remain flat or increase slightly: NAR’s chief economist predicts 3.6% price increase nationally.
- Mortgage rates will remain flat at record lows
- Market time and inventory will decrease now through July and begin to increase slightly as we approach the election.
Thanks for reading and don’t be a stranger!