Is 2020 a Good Year to Buy Real Estate?
Posted by Alex Narodny on Tuesday, September 1st, 2020 at 9:03am
Is 2020 a Good Year to Buy Real Estate?
By, Lisa Roberts @ US Moving Experts (https://usmovingexperts.com/)
The real estate market is famous for being fickle in the best of times. If you were planning on buying a home in 2020, you have probably become even more wary once the pandemic hit. As months passed, it got harder and harder to make any kind of prediction.
However, life does go on. If you are reading this, you are probably one of the many people who had to keep looking to see if it is at all feasible to purchase a home this year. So, is 2020 a good year to buy real estate? The only way you can begin to answer this question for yourself is by doing research. We’ll help you take into account the real estate trends leading up to this year as well as some key market indicators.
Supply and demand
One of the ways you can settle down in a new city or town stress-free is by taking into account your financial situation and the state of the marketplace in the area in which you’d like to buy real estate. The supply and demand principle is operative in the real estate market same as any other. The better grip on this you have, the better you can adjust your expectations before you start looking. The way it works is simple – the more properties there are for sale, the lower the prices, and vice-versa.
A couple of years leading up to 2020 were very competitive for home buyers. Low home inventory levels across the board meant having to enter bidding wars, which in turn drove the prices even higher. The number of available homes has been on a steady decline. However, this year, there are even more factors to consider. According to Forbes, those are:
- baby boomers not wanting to sell
- millennials wanting to buy
- affordable secondary market
- unstable global economy
- the presidential elections in November
So, is 2020 a good year to buy real estate when it comes to supply and demand? As mentioned, the supply is low. However, the uncertainties the year brought with it could bode well for first-time homebuyers. People looking to invest in real estate are holding their breath to see how events will unfold when it comes to the economy and the elections. This frees up the market a bit if you are a first-time homebuyer. You might want to take advantage of that.
As the home inventory was steadily lowering over the past few years, house prices have been going up. The national median price is expected to stay the same, though experts are predicting slight increases towards the end of the year. If you want to buy a home, your best bet might be to do so now, before the prices go up again.
Interest rates are one of the main reasons many people are seriously considering buying a home this year. It could be yours as well if you’ve done your mortgage rates research. Namely, because of the unprecedented nature of the events in 2020, interest rates are at an all-time low. For example, the average 30-year fixed-rate mortgage is at 3.2%. Thanks to this, the monthly mortgage payment for your home could be just a little over the median monthly rent. For this reason alone, 2020 is probably a really good year to buy real estate.
However, it might be much more difficult to get approved for a mortgage these days. This year’s uncertainties have led to historically low interest rates, but they have also made banks more wary of lending money. The threat of unemployment still looms large, so it can be difficult to get a loan if you do not meet certain financial criteria. Also, if you have a low credit score, you are unlikely to get a highly affordable interest rate. So, it is all determined on a case by case basis. If you are still set on buying a property, take all of this into account when making your decision.
What else should I consider if I want to real estate?
Everything we have mentioned so far is highly specific to the current situation in 2020. However, there are other real estate market indicators that you should also take into account if you want to buy real estate, no matter the year.
Number of days on the market
If you look at several homes and compare the number of days they have been on the market, you could get a good idea of whether you’re in a hot or cold market. A hot market is “the seller’s market”, while a cold one is “the buyer’s market.” The longer the homes are on the market, the better your chances of getting a good property for an affordable price. In this case, the seller will be more likely to lower the price in order to sell the property. Also, beware of the homes that spend too long on the market. It could be that there are some gaping flaws or that the seller gravely misjudged the value of the property.
However, because of the supply and demand we have mentioned before, 60 percent of homes spent less than a month on the market in recent years. In such a hot market, it is important to act fast if you want to close the deal. One of the ways you can do this is by ensuring you get pre-approved for a loan. This will signal to the seller that you are serious about making the purchase. Finally, beware of entering a bidding war. Mainly, it is important not to lose sight of the limitations of your budget.
It is unclear whether this can have any relevance to the question of if 2020 is a good year to buy real estate given that it has been such a weird year. In general, though, there are peaks and valleys when it comes to the real estate market during one calendar year. Spring is the busiest season for real estate agents as most home purchases happen at that time. If you are a buyer, this is the most competitive time of the year. Fall and winter are usually slower, so bear this in mind as well when doing your research.
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