2019 was a somewhat tumultuous year for both the housing and financial markets. Looking back, it was easy to see how the market sentiment would be somewhat uneasy. Global trade disputes, a domestic economy continuing a record-setting bull run, and political turmoil are all combining to give the average person mixed signals. Is now the time to buy, sell, take risks, or hold on tight to see what happens in Q1 of 2020? Let’s plunge into the market trends to see if we can glean some insight into what the future holds in store for us.
The Rise of iBuyers
The term, “iBuyer” refers to a real estate investor that uses an Automated Investment Model (AVM) to make cash offers on homes. Since these companies rely on plot points and data to inform them on whether to buy a house or not, it can substantially simplify the process, as opposed to dealing with the emotional decision-making of real human beings. The home is often bought sight unseen. Companies like Opendoor are pioneering this new and innovative way of buying and selling real estate. From their website, “the underlying idea is that a company estimates the value of your home and makes an offer. If you accept, they take on the burden of owning, marketing, and reselling the home.” This can be an attractive and convenient way of selling a home on your own terms.
FHA Loans are Making a Comeback
Over the past few years, FHA loans have taken the backseat due to the big banks’ fear of federal crackdowns. When that happened, some of the smaller lenders jumped in to assume the risk and fill the void. In October of last year, the Department of Housing and Urban Development (HUD) announced a Memorandum of Understanding (MOU), “intended to clarify regulatory expectations within the FHA program, while allaying any concerns mortgage lenders may have about dealing with FCA penalties for their lending practices”. This new guidance will almost surely lead to a bump in FHA Loans in 2020.
Real Estate Bidding Wars are Back in Action
2019 was by no means a slow year for real estate. But in comparison to the previous years, 2019 represented a chance for both buyers and sellers to take a small breather and reassess the market. Buckle your seatbelt, very low inventory and rock-bottom interest rates are pointing to a robust real estate market in 2020.
In conclusion, 2020 is shaping up to be a promising year for those looking to buy or sell a home. With interest rates expected to stay incredibly low, look for those who stayed on the sidelines last year to jump back into the market. On the seller’s side, builders simply cannot construct homes quickly enough to meet the market’s demand, so as long as that trend remains constant, the scarcity will continue to drive home prices upward.