February saw a record pace in a seller’s market, with both inventory and interest rates low. Then the coronavirus crisis hit, with sudden mass unemployment, social distancing requirements, and general unease about what would come next. Difficult as it may be, we venture to predict some 2020 real estate market trends.
Listings Decline, Price Increases Decelerate, and Time on the Market Increases
Usually, tight inventory pushes prices up. However, in April, inventory declined overall. Some of the decline might have been due to delistings because of uncertain conditions, and some resulted as prospective sellers decided to hold off on listing. Prices had been increasing for an astonishing 33 quarters in a row. Prices are likely to stall, neither increasing nor decreasing until the health crisis becomes clearer and the economy begins to open with greater confidence.
Markets dislike uncertainty. Except in market hotspots, sellers who decide to gut it out and keep homes listed may face a longer time on the market to find a willing buyer at a fair price. Overall, Realtor.com predicts a 15 percent drop in home sales and flat prices for 2020.
Smaller Markets Fare Better
A nearly overnight shift to remote work will have lingering effects that show up in 2020 real estate market trends. Those lucky enough to be in industries that pivoted quickly and stayed in operation when the lockdowns came swiftly realized that they could be productive from home, and home doesn’t necessarily have to be in the same city as their employer’s location. These workers will start to look at smaller cities and suburbs. Sellers may see a sudden rise in demand for genuinely separate home offices. Millennials working remotely may put the spotlight on small city or suburban environments with good schools and more affordable housing. The greater metro Atlanta area features several such areas.
Low Interest Rates Continue but Qualifying Criteria Tighten
Markets that dislike uncertainty include financial markets, banks, and other lenders. Qualifying for a loan may become more difficult in 2020, at least until lenders gain confidence that a sustainable, if slow, economic recovery is underway. As a result, even desirable homes in good locations listed at fair prices may struggle to close a sale. An alternative to selling, at least until market conditions become more predictable, is renting the home. Excalibur Homes provides Georgia lease and property management for homeowners and investors who elect to retain their property and generate income from rent, rather than strain for a sale that will be a long time coming.