Real Estate Forecasts and Foreshadowing in 2020
Mortgage Rates on the Decline
The government-controlled company Freddie Mac expects mortgage rates to remain low over the next two years, averaging 3.8% in 2020 and 2021. Its forecast indicates the housing market will continue to stand firm, with home sales increasing from 6 million in 2019 to 6.2 million and then to 6.3 million for 2020 and 2021, respectively. House price growth is expected to decelerate through 2021, with annual rates of 3.2%, 2.8% and 2.1% in 2019, 2020 and 2021, respectively.
Not for Sale
Despite attractive interest rates, Realtor.com believes a lack of homes on the market in 2020 will drive down existing home sales by 1.8% to 5.23 million. Home prices are likely to decline in Chicago, Dallas, Las Vegas, Miami and San Francisco. The website believes top markets in 2020 will be found in Boise, Idaho; McAllen, Texas; Tucson; Chattanooga, Tennessee; Columbia, South Carolina; Rochester, New York; Colorado Springs, Colorado; Winston-Salem, North Carolina; Charleston, South Carolina; and Memphis, Tennessee.
Out of the Price Range
In a year-end report from real estate researchers at Attom Data Solutions, the average wage earner can’t afford to buy a home in 71% of the United States, which is an improvement from 73% in the third quarter and 75% a year earlier. With the national median home price at $257,000, homebuyers need a gross income of $67,647. However, the average annual wage in the nation is $58,214.
Pumping the Brakes on Refinancing
Refinance originations were expected to be $846 billion in 2019 before slowing to $650 billion in 2020 and $475 billion in 2021, according to Freddie Mac. Modest increases in home sales and house prices are predicted to boost purchase mortgage organizations for the foreseeable future.
Retail on the Ropes
The Motley Fool company Million Acres sees the continuation of a troubling trend. More than 9,000 retail stores are expected to have closed by the end of 2019. That follows 5,524 that shuttered in 2018 and 8,139 that closed in 2017. Retail closures are expected to continue in 2020 at a rate that outweighs new openings.
Avoiding the Mallpocalypse
Axios predicts 2020 as the year of the mall makeover, with more nonretail destination options filling the anchor vacancies left by big-box department stores. Fitness, entertainment and services such as tattoo parlors that can’t be moved online are expected to help boost the vital signs for malls, which were once believed to be beyond saving from extinction.