Take a closer look at the projections for where the economy is heading in 2020-2021 and its impact on residential real estate.
On May 13, 2020, Dr. Lawrence Yun, Ph.D., NAR Chief Economist, spoke to REALTORS® about where the economy is heading in 2020-2021 and what this means for residential real estate.
In past years, thousands of REALTORS® descended on Washington, D.C., in May for the Annual Mid-Year Convention, which focuses on legislative issues and visits with our leadership on the Hill. This year, the meetings were conducted on Zoom—the new location of choice for meetings, family gatherings, and Happy Hours!
Out of all the sessions, I always look forward to Dr. Yun’s presentation. He deals in reality, presented in easy-to-understand charts and graphs.
Economic Projections & What it Means to You
As you can see in the first chart below, 2020 got off to a very healthy start. Investment in residential real estate was up 21% in the First Quarter on an annualized basis.
As the Federal Reserve continues to print money, eventually mortgage rates will have to go up. Mortgage interest rates trend with inflation, but right now, there is no real inflation. Within the next 5 or 6 years, however, Dr. Yun predicts an increase in mortgage interest rates.
For those who purchase a home in 2020-/2021, at historically low rates, these homeowners will be in a strong position when delayed inflation causes rates to rise along with higher costs for food, rent, tuition, and medical expenses.
Buying a Home in 2020-2021
Home prices are stable. This is due primarily to a very low inventory of desirable homes for sale. In some markets, the homes for sale are not well matched to what buyers are looking to purchase.
Dr. Yun sees new contracts trending upwards already with a strong recovery in 2021. Mortgage applications were trending up again by late April. The best time to take advantage of today’s low rates is to buy a home in 2020.
Understanding the Buyer’s Purchasing Power
How will rates, even slightly higher rates, impact your purchasing power? Take a look at this chart below to see the difference even a small increase could have on your ability to buy your dream home.
The pent-up demand is there and once restrictions are eased, we expect to see our buyer clients filling our calendars. Those that were planning to leave New York and other major metropolitan areas before are even more certain that Delaware is the right place for their future. We’re here to help serve you. Let’s talk about finding your next home and get this deal done in 2020.