What to Expect From the Housing Market for 2020 in the United States?
According to Freddie Mac’s forecast, the housing market will remain steadfast and moving forward, offering more options for buyers, mainly due to a sustained decline in mortgage interest rates.
By: Edda Pujadas
DORAL, FL – Low-interest rates, moderate inflation, and an increasingly strong job market, among others, there are many reasons to be optimistic about the housing market during 2020. This is stated by the Federal Mortgage Loan Corporation, better known as Freddie Mac.
Freddie Mac is the company, backed by the U.S. government, authorized to grant and secure home loans in the country, which indicates that a sustained fall in mortgage rates and a significant recovery in the labor sector helped the housing market improve in the final months of 2019, a trend that continues at the start of the new year.
Analysts explain that the economy remains strong, as in 2019, the record was set for the longest period of economic growth in U.S. history, positively impacting 2020, when strong labor gains, low-interest rates, and lower financial market volatility should lead to the momentum of the housing sector.
With regard to the unemployment rate, it is at its historic lows at 3.5%, and the labor market is expected to continue to advance along with the increase in jobs, which will help to support personal and family financial stability and thus to incentivize greater demand for homebuyers.
Referring to mortgage rates, Freddie Mac points out that, since the first half of 2019, rates have dropped, marking the fourth-lowest annual average for the 30-year fixed-rate mortgage in Freddie Mac’s weekly survey since 1971. They indicate that by 2020, it is expected to remain even lower, averaging around 3.8, predictions that seem to be quite close to reality as in the first poll this year, the rate stood at 3. 72%.
The latest news reveals that the 30-year fixed-rate mortgage averaged 3.72% for the week ending January 2, 2020, slightly below the previous week when it was at 3.74%. A year ago, at the moment, this same rate stood at 4.51%.
The 15-year fixed-rate mortgage averaged 3. 16%, equally below the previous week, and less than one a year when it was set at 3.99%. Se maintained a similar scenario with the five-year adjustable-rate hybrid mortgage (ARM) that averaged 3.46%, decrease compared to the week and the previous year, when it was at 3.98%.
The economists claim that the most positive economic data and a better feeling in the housing market have brought stability in mortgage rates. It’s important to note that Freddie Mac surveys lenders across the country between Monday and Wednesday of each week to collect their mortgage rate figures. The average does not include additional fees, known as points, that most borrowers must pay to get the lowest rates.
IN FLORIDA
Freddie Mac’s optimistic position is shared by an analysis by the Economic Analysis Program of the University of Florida’s (UF)Office of Economic and Trade Research (UF) which states that, at the end of 2019, economic indicators in our state have remained very favorable and the outlook for 2020 is encouraging as the market Florida continued to strengthen in the last months of last year.
The UF study indicates that in November 2019, 217,400 jobs were added statewide compared to the previous year, an increase of 2.5%. Among all industries, education and health services got the most jobs, followed by leisure and hospitality and professional and commercial services. The unemployment rate reached its all-time low of 3. 1% in the penultimate month of last year.
In Miami, the real estate framework was presented two highlights in 2019, which impacted the development of 20 20:the federal approval of the regulations for Opportunity Zones and that more condominiums offered the option of short-term rents.
The Opportunity Zones program offers tax incentives to developers who invest in economically depressed neighborhoods across the United States. In total, there are 8,700 communities that have been designated as Opportunity Zones, and 67 of them are located in Miami-Dade County.
In New York City, there are 306 Opportunity Zones, and Los Angeles County has 274, and Cook’s Rank of Chicago has 181. Created by Republican Sen. Tim Scott of South Carolina and Democratic Sen. Cory Booker of New Jersey, the program is intended to stimulate investment in places that institutional money could overlook, and this development would help communities and businesses.
On the other hand, a mid-slowdown in luxury condo sales in Miami, some developers are choosing to build a new type of product: more affordable units that buyers can rent without restrictions and whenever they want. The projects are mainly grouped in downtown Miami and Brickell, with prices in the range of $300,000.
All of these factors, and according to Freddie Mac‘s forecast, the housing market will remain strong as home sales increase from 6.0 million in 2019 to 6.2 million in 2020 and 6.3 million in 2021. In short, a stronger monetary policy stance and robust labor sector helped the U.S. housing market regain its position.