Mortgage and Real Estate Trends: What to Expect During the End of 2020

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The real estate industry, like the rest of the country, has gone through a lot in 2020. But the year is far from over, and there will be plenty of chances for trends to change; either positively or negatively.

These are the biggest mortgage tends that you should watch during the remainder of 2020…

Real Estate and Mortgage Trends for the Remainder of 2020

Mortgage Rates

At the beginning of the year, it seemed likely that mortgage rates would stay relatively unchanged from December of 2019 to December of 2020. If anything, it was possible that rates would tick slightly upward, but most professionals in our industry seemed confident that any increase in rates would be minimal.

But as worries over coronavirus led to a stay-at-home and lockdown orders, the real estate market slowed and interest rates dove; in some cases they dropped as much as half a percent in about ten days. Although they have continued to zig-zag up and down, the general trend has been a continued decline in interest rates for available mortgages.

In the future, it seems probable that mortgage rates will continue to decline and we could see interest rates even lower than before. This means that consumers could experience some of the best rates in their lifetimes, which is one of the reasons that you may want to consider purchasing a home (safely, of course) during the coronavirus emergency.

Inventory

Available inventory is one of the most important factors for a vibrant real estate market, and it can have a large impact on mortgage trends as well. When 2020 began, there was a lot of industry worry over the shortage of available homes, especially mid-market homes, which often provide a foundation for the industry.

Not only did the inventory remain low, it was significantly lower in the spring of 2020 than past years. Many would-be seller never listed their homes and even took their active for-sale properties off the market. In an effort to keep people from visiting their homes (a worthwhile goal, to be certain), the overall inventory of existing homes declined by about 20%.

This trend could go either way, and like so many aspects it all depends on the virus. If the virus continues to haunt the country, inventory could remain low. New housing, a common solution to low inventory, takes time to bring to market, so it could be months before inventory catches up.

Home Prices

Not only does available inventory matter, so too does home pricing. With a rapid market and robust sales in 2019, there was legitimate concern that many homes were being priced out of the range for typical buyers. Entry-level housing in particular seemed to be increasingly rare.

But as home sales declined in the first half of 2020, it appears that pricing may have steadied. However, new homes could be a player in this trend. If new homes can get to the market fast, it will provide inventory relief and reduce competition for existing homes. But if it takes too long, the lack of available inventory could result in continued increases in home prices.

Refinancing Hits Peak, Appears to Have Met Saturation Point

When mortgage rates dove in the late winter and spring of 2020, there was a wave or refinancing that hit the market. Homeowners, seeing an opportunity to take advantage of low, longterm interest rates, were refinancing their mortgages at a rapid pace. In fact, many mortgage lenders in the industry were so inundated with refinance applications that they could barely keep up. (Some in fact, couldn’t keep pace at all!)

This flood of refinancing applications appears to have hit its high point and is beginning to crest. This is likely due to the simple fact that most homeowners who are motivated to refinance already have. There is a relatively small pool of good candidates for refinancing, so while the benefits of refinancing remain mostly unchanged, the trend appears to be declining.

Real If you have a longterm mortgage with a high interest rate, you may want to consider refinancing as a way to reduce your monthly payment. Rates may go lower, but any further drop will likely be minimal.

Virtual Home Tours Continue to Rise

This isn’t so much a trend for 2020, but a permanent aspect of the real estate market, one that has simply been accelerated by the COVID-19 crisis. 3D home tours were already being used by many people in the industry, but they are now adopting the technology at a faster pace. Real estate agents in particular are implementing this technology, making online listings far more interactive and encompassing than before.

But it’s not just real estate agents who should understand 3D tours or “virtual tours.” Real estate investors, specifically landlords, should be able to use this technology to give themselves a competitive advantage. Like buyers, potential renters may want to view a home virtually first before they make a physical trip to the property. This is especially true in the age of the coronavirus.

Despite the challenges, real estate activity has been strong.

Market Activity

Everything we have discussed so far, from interest rates to home pricing to refinancing, comes down to overall market activity. In June of 2020, according to Zillow, there was an increase in pending sales, making the overall real estate market surprisingly robust and active. Home values were up 4.3%, although inventory remained low, down almost a quarter from the previous year.

So overall, despite uncertainty and rapid changes, the overall real estate trends are fairly strong.

San Diego Will Remain a Hot Market

In our market, it’s possible that housing prices could go even higher. This is good news for current owners, but bad news for people seeking to purchase a home in our already-high-priced market. San Diego home prices have continued to climb, possibly due to the low available inventory.

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Testimonials

“Chad, it was a pleasure working with you. Your loan was smooth, speedy, and we were kept well informed. I will make sure to prioritize offers where you are the loan officer as I know they run smoothly.”

As a first time home buyer, I wasn’t sure what to really expect, but Chad and his team made the process very clear and easy. Once the process was over, they didn’t just vanish either. They kept in touch and looked for opportunities that may benefit me. A couple years later, they found me a great refinance opportunity that saved me a lot of money! Once again, the process is long and grueling, but Chad and his team made it as painless as could be. Any barrier that I encountered, they found a quick solution to make it happen. Mortgages are a huge commitment and I wouldn’t pick any other team to help me make the right decisions.”

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I hope you enjoyed reading this article. It's my goal to keep you updated with the latest real estate mortgage news. I'm proud to provide you with 100% original and unique content. Subscribe now to get high quality real estate mortgage content and articles delivered directly to your inbox. Chad Baker is Regional Manager for Cross Country Mortgage. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2019. Got a question for Chad? Call (858) 353-8331 or submit your question online