Recent financial forecasts show that due interest rates still at historically low levels, home purchases are likely to elevate in 2020, especially among young and first-time home buyers. In fact, Washington D.C.-based Mortgage Bankers Association is also estimating that mortgage origination will grow 1.6% next year while home prices could in fact drop 2020, leading to more availability and options for buyers to consider.
A strong job market is also helping home buyers obtain more purchasing power and placing more first time buyers in a position to finally make the transition to home ownership.
Anywhere between 8.3 to 9.2 million first-time home buyers are projected to become homeowners in the next 3 years, according to credit bureau Trans Union, which also has many industry professionals looking ahead.
And with mortgage rates expected to hover around 3.8% in the coming year, the buyers market in Chicago and throughout the rest of the country is expected to be very competitive.
Analysts at Redfin are reporting that due to steady interest rates and the increased volume of millennial buyers, about 1 out every 4 home listings will see a viable bidding war in 2020, compared to only 1 out every 10 listings in 2019. The increase in competition will most likely push annual price growth up to 6% in the first half of the year, which would be 4% higher growth than seen in the first half of 2019. This increased competition and quicker price growth will tempt more homeowners and builders to list their homes or projects for sale, helping to improve the balance between supply and demand by the end of the year.
Supply and demand will become more balanced as 2020 progresses as more listings of new construction and existing homes hit the market, allowing price growth to moderate to 3%, according to the report by Redfin. With increased buyer volume and attractive terms, various sources are all forecasting that 2020 is shaping up to be a very competitive year for buyers.