Tuesday, December 24, 2019 / by Jordana Tobel
What’s to Come in 2020
South Florida Surge
Equally important is the surge of new companies relocating to the tri-county area. This migration of employment and funds will result in increased residential and office developments.
“I think there is a really big opportunity in addressing the fatter part of the pyramid, which is housing,” said Arnaud Karsenti, managing principal of 13th Floor Investments. “Not necessarily in the higher-end residential, but in the middle-market projects that cater to median-income single families.”
Florida: As Attractive As Ever
The combination of new tax leniencies, South Florida’s beaches, and the sunny weather are main factors in the upward growth of Florida’s population which has been happening really since the invention of air conditioning.
“[By] 2025, the amount of people moving here in only going to get bigger,” stated Miami Worldcenter Associates Managing Partner Nitin Motwani.
Rates are Low – and Will Stay Low
In addition to the local factors above, there are national factors that will contribute to the health of the market in 2020. Experts say rates will stay low. According to Odeta Kushi, deputy chief economist at title insurance and settlement services provider First American, there’s “emerging consensus” that rates will remain low next year—likely somewhere between 3.7% and 3.9%, she says. Forecasts from Freddie Mac and the Mortgage Bankers Association back this up, both predicting 2020 rates within this range. Fannie Mae actually predicts rates will clock in even lower, vacillating between 3.5% and 3.6% throughout the year.
Upward Trajectory of Home Prices
Home prices will continue their climb upward, according to experts, largely thanks to tight inventory and high demand. According to the latest home price forecast from property data firm CoreLogic, home prices should tick up by 5.6% by next September—up from the just 3.5% jump we saw this year. It seems the price growth may continue beyond 2020, too. Data from Arch MI shows there are currently no states or metro markets projected to see prices declines in that period.
In addition to continued price growth, there is a tightening of inventory – as homeowners are staying in their homes longer and longer. The average homeowner stays in their home 13 years, compared to 8 years in 2010. First time home-buyers lock in great rates and existing homeowners refinance, which means that there is less turnover.
Millennials are Buying
So we’ve got low rates, price growth, less inventory, and add to this the fact that millennials are continuing their buying streak. Millennials made up a whopping 46% of all mortgage originations according to realtor.com in September 2019. Millennials rank homeownership as one of their top goals in life—higher than even marrying or having kids—and with interest rates low and incomes up, it’s the right time to buy a home for many.
Real Estate Becomes More Digital
Paper files of the past are long gone and with it, comes a new digital era in real estate. What does this mean for the market? It means more digital solutions, more innovation and a more efficient market.
Overall, the local factors in South Florida combined with the promise of the national industry, the real estate market for 2020 in the tri-county market is increasingly bright, just like our Florida skies.