Here's What the Housing Market Has in Store for the Rest of 2020
- Author: Jessica Williams
- Posted: 2023-12-13
Rents Will Rise; Millennials Will Buy
It's no secret that rent is on the rise in many major metro areas. Even in smaller areas, if there is a lucrative profession nearby, the market capitalizes on that in the form of so-called "luxury apartments". In reality, these apartments don't usually have many amenities that "normal" apartments don't have, but they are a justification to charge higher rent, and, in some cases, dodge local legislation regarding affordable housing.
As Baby Boomers begin to start selling houses in droves, Millennials will likely begin to purchase them as the benefits of renting begin to disappear. This will keep house prices fairly stable throughout 2020.
Activity Ramping Up
Market activity is already ramping up in 2020. As projected, Baby Boomers are selling their houses at higher rates. However, it's important to note that these houses are primarily selling in hot job markets. Houses in rural areas are less appealing to the current generation of home buyers and are still not selling well.
In addition to sales, there will continue to be lots of new construction of housing units. This is great for consumers, as more supply will lead to cheaper rents in most markets. However, this could be detrimental for sellers. This means that sellers could face off against one of the cheapest rental markets in modern history, making it difficult to make much off of home sales.
Prices Will Grow Much More Slowly
Unfortunately for those selling, home prices have already begun to take a dip in acceleration of growth. This is due to many factors, including the new constructions we mentioned earlier. This is not to say that homes will begin losing value. However, their values will not see nearly the rates of increase that homeowners may be used to seeing. This is great news for property taxes, but not great news for those looking to sell in 2020.
Note that if you're concerned about property tax, jurisdictions that have experienced high levels of growth often offer a one-time "homestead exemption" that exempts the taxpayer from paying property taxes past a certain increase each year. Of course, those who own multiple properties and rent them out usually aren't eligible for this. However, those who have lived in a certain area and are less and less able to pay their property tax each year likely qualify for relief under a "homestead exemption" or a local equivalent.
Larger Cities Will Be Further Gentrified
Most likely saw this one coming, but gentrification is not showing any signs of slowing down in major metropolitan areas. This has a mix of benefits and downsides. First, traditionally cheap metropolitan areas are being "taken over" by people with much more family wealth than people who already live in them, which drives up prices for everyone, a clear downside.
In some instances, gentrification can be what some poorer cities need to succeed. Many cities were stuck in poverty for decades, and gentrification is bringing them out of poverty. However, there is still question as to who is benefiting from this in the end. It is very likely once again those who can afford to gentrify the area.
Wrapping Up 2020
2020's market is proving to be quite unique. Many years are marked by an extreme in one or more areas. However, for the first time in awhile, we aren't seeing any extreme trends taking off or ending. Things in the housing market seem to be largely slowing down when it comes to money.
However, make no mistake about the pace of houses moving. Remember, sales are increasing and are expected to keep increasing. However, prospectors and those hoping to sell what they have will likely be disappointed by 2020's slow price growth. On the other hand, those looking to "turn over a new leaf" in a new city are likely to find benefits in more housing units being rapidly built and prices finally stabilizing.
