2020: Happy Housing Year!
A new year customarily elicits widespread speculation on the economy and its various aspects, but 2020 has the added intrigue of a fresh decade and an upcoming presidential election. The housing market is a popular topic not only due to its close relationship to the economy overall, but because it’s relevant and relatable to just about everyone. Predictions are perhaps best left to analysts and pundits; but there’s plenty of news that gives homeowners and renters food for thought about moves they may want to make this year.
Data analytics firm CoreLogic provides financial, property and analytics for the real estate industry, and has a positive outlook for this year. CoreLogic President and CEO Frank Martell said, “Nationally, over the past year, home prices are up 3.5% with the rate of growth accelerating from September into October. We expect home prices to rise at least another 5% over the next 12 months.”
Ongoing home price increases created a remarkable third quarter 2019 for homeowner equity. Black Knight Financial Services reported that the amount of equity available to U.S. homeowners with mortgages before reaching a maximum loan value of 80% reached $6.2 trillion. That’s the largest amount of tappable equity on record for a third quarter.
Home buyers will be able to borrow more next year to keep up with rising home prices. The agencies that set guidelines for loans that are acquired by Fannie Mae and Freddie Mac (conventional) and those insured by the Federal Housing Administration (FHA) announced higher maximum loan limits for mortgages in 2020. The new limits affect most of the U.S.; however, there are higher loan limits for areas that meet high-cost area designation criteria that are tabulated based on local prices and other guidelines.
|Conventional Loan Limits||$484,350||$510,400|
|FHA Loan Limits||$314,827||$331,760|
Real estate industry experts are optimistic about the housing market. In a summary of the Real Estate Economic Forecast from the Urban Land Institute (ULI) conducted last September, the organization said, “Forty-one economists and analysts at 32 leading real estate organizations see no end to the current record-setting economic and real estate expansion that started in 2010. The main takeaway is that there will be steady real estate markets and returns through 2021.”
Continued home price growth and healthy equity provides current homeowners with opportunities in 2020 to consider home equity lines of credit for home projects, debt consolidation or other things, as well as moving up, downsizing, vacation or second homes. Consumers who currently rent still have opportunities to take advantage of interest rates that are still in the historically low range.