2020 Housing Market Predictions
Written by Windermere Chief Economist, Matthew Gardner
Should You Buy A Home In 2020?
Buying a home is one of the most important financial decisions a person will make. A key rule of thumb is to keep your debt-to-income ratio as low as possible. Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. To get a qualified mortgage, the Consumer Financial Protection Bureau recommends a total debt-to-income ratio below 43%.
Another key metric to watch is the price-to-rent ratio, which is the ratio of median home prices to annualized median rent in a given location. As a general rule, ratios ranging from 1 to 15 are low, meaning it’s typically better to buy. Ratios from 16 to 20 are moderate, meaning the advantages of buying are less clear. And ratios of 21 and higher mean it is much better to rent. San Francisco has the highest ratio in the U.S. at 50.11, according to analysis of Census data by Smart Asset. Los Angeles comes in at 38.59, New York at 36.83, and Seattle at 36.07.
However, I feel confident that 2019 will end with a slight rise in home sales. “Home prices next year will continue to rise as mortgage rates remain very competitive,” Gardner says. “Look for prices to increase 3.8% in 2020 as demand continues to exceed supply and more first-time buyers enter the market. In the year ahead, I expect sales to rise around 2.9% and the share of first-time buyers to grow, making them a very significant component of the housing market.”
Should You Sell A Home In 2020?
If your home no longer matches your lifestyle, perhaps due to family changes or employment prospects, you may be ready to sell your home in 2020. Forget about national housing market trends. If you’re thinking about selling a home, you want to know if there’s buying demand in your area.
In great news for sellers, the Puget Sound region continues to see strong demand! 2019 ended with a severe shortage of homes, capping six straight months of decline in our local market. Sellers throughout Western Washington can expect significant interest in new listings. Since January 1st, we are seeing high buyer demand, low interest rates, low inventory, multiple offers, and most homes go pending within a few days. Now could not be a better time for sellers!