Welcome to the new reality for the housing market. Who could have expected so many changes during the 2020 housing season? Economists had predicted that the 2020 housing market would be stable. There would not be any unexpected changes until 2021. On top of that, the next recession was not supposed to happen until 2021.

Nonetheless, the pandemic and the new unemployment reality has changed forecasters thought. Realty specialties have designed new models to accommodate the present season. Moreover, with so many technology employees having to work from home, Middle America may see a boost in housing demand.
 

The New Housing Reality

This is what realty.com had forecasted for the 2020 Housing Market at the beginning of the new year.
 

• Current Home Sales: 5.25 Million


• Home Sales Change in Percentage: -1.8%


• Current Home Prices: $274,000


• Home Prices Change in Percentage: 0.8%


• 30-Year Mortgage Rate: 3.5%


• New Family Home Starts: 10%

However, this is the new forecasted model for the housing market.
 

• Current Home Sales: 4.5 Million


• Home Sales Change in Percentage: -15%


• Current Home Prices: $275,000


• Home Prices Change in Percentage: 1.1%


• 30-Year Mortgage Rate: 3.2%


• New Family Home Starts: -11%

 

What a Wild Ride

According to George Raitu, senior economist at Realtor.com, "We got derailed on the housing forecast as we expected." Home sales will be much lower than 2019 with an unexpected decline of 15%. Home prices will remain flat for the duration of the year.

Buyers see so much uncertainty for the future housing climate. Presently, the baby boomer generation is not selling their homes, and millennials want to buy homes. The global economy is unstable, and who knows what presidential candidates will win the November election.
 

Working from Home

On a Positive note, Raitu explains that homeowners should expect to engage buyers who would want to buy a large home with a home office. And this is precisely what Dylan Hecklau is searching for in his next housing adventure.

Dylan works for a San Mateo company and presently pays $3,200 in monthly rent so that he can have convenient access to his employer in the San Francisco Bay Area. However, since the pandemic, his employer has mandated that he works from home. So, why spend $3,200 a month in rent just to work from home?

"With nothing keeping me here, I can't justify paying the rent prices," said Dylan. He has been saving up a hefty down payment to put towards his dream home in Sacramento, California. Dylan originally planned to use the money for a relaxing vacation.

Expensive housing markets, like Los Angeles, New York, and the Bay Area, may experience a mass exodus of highly qualified technology employees. Facebook, Google, and Twitter have advised that the majority of their employees will work from home for the remainder of the year.
 

Navigating Transition

According to the technology giants in Silicon Valley, many employees may embark on a permanent transition to work from home. Nevertheless, the technology giants may not want to pay someone who lives in Detroit, Michigan, the same wages as an employee who lives in the San Francisco Bay area.

Expect millennials to enter the housing market in droves in such desirable markets like Indianapolis, Indiana; Asheville, North Carolina; and Fresno, California. These housing markets have attractive prices, with starter homes available at $153,159 for the Indianapolis, Indiana, region, according to Zillow.
 

Housing Inventory

Now, one main concern hungry buyers may face in these attractive markets is inventory availability. The abundance of newly constructed homes for sale is down 45% from 2019. Home sellers may back off from listing their homes on the housing market until the current pricing model increases.

On the other hand, even though a Millennial might secure a future homestead, it will become increasingly challenging to secure a home mortgage, even at these historic low rates of 3% below average. Because of increased joblessness, lenders are getting tough on borrowing restrictions.

They are changing the mortgage qualifications by decreasing credit limits and increasing income eligibility guidelines. Meanwhile, with a 20% down payment and a minimum 720 credit score, a well-qualified buyer should find a plethora of availability. However, whatever may happen for the present housing climate, the outlook for 2020 will remain somewhat rocky.