Judy and I would like to wish you all a Happy New Year! We have enjoyed a wonderful holiday season with family and friends and look forward to another year of providing excellent service to our clients. Best wishes of happiness and health in 2020.
This week we will kick off the New Year with the 2020 Housing Market Predictions: A Snapshot by RISMedia as well as 2020 home trends.
Home-Building - Although homebuilders maintain optimism, buyer demand is stronger, and analysts are divided on whether inventory is meaningfully rising. For 2020, the National Association of REALTORS® expects 10.6 percent more housing starts (multifamily and single-family), while realtor.com® researchers forecast a 6 percent increase in single-family starts. On the flip side, the Urban Land Institute projected single-family starts to tumble 4.7 percent. According to Census data, construction in November spiked—an encouraging indicator.
Home Prices - After a cooling-off period, home prices reignited this year, and are expected to further increase in 2020. How much? At most, a cohort of economists at the NAR Forecast Summit predicted a 3.6 percent rise; at least, realtor.com predicted 0.8 percent; and in the middle, both the ULI and Zillow settled within 2 percent (2.5 percent and 2.8 percent, respectively). By comparison, from January-November 2019, the median price rose 3.18 percent, according to data from Homesnap.
Home Sales - Despite benefiting from low mortgage rates, buyers continue to grapple with limited options, contributing to muted sales this year—a challenge continuing into 2020, experts predict. As of September, NAR expected a 3.4 percent gain in home sales in 2020; in December, however, realtor.com researchers dialed down to a modest 1.8 percent. On an annual basis, existing-home sales inched up 2.7 percent, according to NAR’s November report.
Mortgage Rates - Earlier this month, the Federal Reserve kept the key rate unchanged, and with the economy humming, analysts anticipate continued lows in 2020. Out of the NAR Forecast Summit, economists expected a favorable 30-year fixed mortgage in 2020, at 3.8 percent. Realtor.com researchers have a similar take: 3.88 percent. According to Freddie Mac, as of December 19, the average 30-year fixed mortgage rate was 3.73 percent.
Odds of a Recession - Throughout much of 2018 and 2019, analysts debated the probability of a recession, either in 2020 or 2021. The consensus at the NAR Forecast Summit: at best, no recession, and at worst, a 29 percent chance. For its part, Zillow forecasted no recession whatsoever, thanks to Americans’ confidence (equaling increased spending), a heartening labor market and promising wages.
The Takeaways - “While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability. Higher development costs are hurting affordability and dampening more robust construction growth.” – Robert Dietz, Chief Economist, National Association of Home Builders
“For the last few years, the lack of inventory has constrained the pace of home sales and increased the rate of home-price growth, leading to affordability challenges across the country. November’s strong monthly and annual gains indicate that potential homebuyers next year will have more properties to choose from…[and] the continued increase in permits indicates that the pace of construction should stay strong in early 2020.” – Mark Fratantoni, Chief Economist, Mortgage Bankers Association
“While the economy is in a sweet spot, improvements in housing market sales volumes will be modest heading into next year simply due to the lack of available inventory. The demand is clearly not being met for entry-level millennials and trade-up Generation X homebuyers. If there was more inventory of unsold homes for buyers to choose from, home sales would be rising at a faster rate.” – Sam Khater, Chief Economist, Freddie Mac
“As inventories of starter homes continue to be a barrier for millennials, we will see more non-traditional households, such as roommate situations or even multigenerational living, popping up to support the financial load. This trend shows no sign of slowing down in the coming year, which presents an opportunity for agents to appropriately guide these younger adults to homes that balance both their desire for homeownership and potentially elevated costs.” – David Mele, President, Homes.com
“If current trends hold, then slower means healthier and smaller means more affordable. Yes, we expect a slower market than we’ve become accustomed to the last few years, but don’t mistake this for a buyer-friendly environment—consumers will continue to absorb available inventory and the market will remain competitive in much of the country.” – Skylar Olsen, Director of Economic Research, Zillow
“Housing remains a solid foundation for the U.S. economy going into 2020. Although economic output is expected to soften—influenced by clouds of uncertainty in the global outlook, business investment and trade—real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting. Accordingly, 2020 will prove to be the most challenging year for buyers, not because of what they can afford, but rather what they can find.” – George Ratiu, Senior Economist, realtor.com
“The consensus [at the Forecast Summit] was that mortgage rates may rise, but only incrementally. I expect to see home price affordability improvements, too. This year we witnessed housing costs grow faster than income, but the expectation is for prices to settle at a more reasonable level in the coming year, in line with average hourly wage growth of 3 percent on a year-over-year basis.” – Lawrence Yun, Chief Economist, NAR
Now, before you pack up your brass fixtures, terrazzo accents, and macrame, take some time to sneak a preview of what real estate experts say are the top home trends we’ll be checking off our lists in 2020.
Minimalist kitchens - We’re currently in age of Marie Kondo, when tossing out appliances that bring us no joy (au revoir, blender) is all the rage. Whether removing unwanted kitchen clutter completely or cleverly concealing it, experts agree minimalism is key. This minimalist cabinet lends itself to a streamlined look. “Kitchens may be designed [to make] more of a design statement than a functional statement,” Arriz says.
Elissa Morgante, founding partner of Morgante Wilson Architects, concurs. “There’s definitely a trend toward modern, cleaner looks, achieved through everything from concealed appliances to slab stone backsplashes,” she says. Further, “Even in homes where the kitchen itself is tucked away, there’s a desire to remove unnecessary visual clutter so that it’s a more inviting space.”
Speaking of tucked away kitchens, Frank Bodenchak, licensed salesperson and senior global real estate advisor, has seen this trend materializing in the Hamptons. Bodenchak describes “prep areas behind kitchens, which allow homeowners to entertain in the main kitchen, while food is prepared or warmed in the secondary area.” Talk about kitchen inception!
Thoughtful foyers - The foyer is often overlooked in condominium design, but it is one of the most important elements of a floor plan because it evokes a grand sense of arrival. “Buyers, especially those opting for a condominium in lieu of a single-family home, appreciate having a dedicated entryway that allows for a more graceful, defined transition to the rest of the home.” The added sophistication is appreciated by those living in multi-unit buildings that might lack this classic home feature. Says Arriz, “I think there is like a little bit more of a pause when you walk into an apartment, because people do like that it adds elegance.”
Award-winning interior design firm Est Est, based in Scottsdale, Arizona, uses its foyers to set the tone for highlighting the breathtaking landscape of the Southwest. This is especially evident in their work on the renowned Optima Kierland luxury apartments and condominiums.
Keeping palettes black and white - In addition to classic white, black is now developing a reputation as a household neutral. According to Morgante, “We’re seeing a trend toward more adventurous choices such as special dark, monochromatic and very saturated wall colors. “Black certainly fits into that category, and it can be very dramatic, classic, casual, or modern depending on how it’s used. There was a long period of time where people were intimidated by black or thought it was too goth, but that’s not the case anymore as they’ve seen—either through magazines, TV or the internet—how it can be used as a neutral to ground a space. We’re using it everywhere from whole rooms and accent walls to black-stained floors, cabinetry and trim.”
A recent survey by Sherwin-Williams confirms the trend, with 66 percent of professional interior designer respondents sharing that black is now a new neutral. With that said, the more traditional white walls aren’t going anywhere in 2020. Bodenchak shares, “Clean palettes are in! Bright white has replaced off-whites and colors as the paint of choice. New home buyers are appreciating homes with straight lines, minimal trim, or even no trim (like no crown moldings) in favor of the busier trim popular a decade ago.”
Smart and savvy homes - No list of 2020 trends can be without tech advancements. With voice-activated services assisting us from turning off our lights to ordering takeout, our preference for—and even reliance on—technology is evident in upcoming home design.
Says Bodenchak, “All new constructions these days have some ‘smart’ home features, but to varying degrees. Most thermostats and pool equipment, for example, can be controlled remotely by the customer’s iPhone. But more expensive houses often take it to the next level, offering integrated control over heating/cooling, pool, music, theater, alarm, and video surveillance. More advanced homes offer remote lighting capabilities, allowing the homeowner to regulate lighting for certain paths, or their entire home, remotely.”
As the nation braces itself for full deployment of the fifth generation of wireless technology, folks may find themselves enjoying not just faster, more efficient connection, but the opportunity for new devices, collaborations, and services to support our smart homes.
