2020 Real Estate Market Predictions

 

2019 has been a great year for real estate.  Despite predictions to the contrary, we have seen another year of growth in the market.  But the question is, will this continue in 2020? 

Key indicators are leading me to predict another strong year in 2020.  Unemployment is low (2.8% in San Diego), incomes are rising at a good rate (just over 3%), home values rose at a sustainable rate (4% in San Diego), and new home construction  in San Diego still lag housing demand.  Interest rates remain very low (below 4% as of this writing.)  Sales have remained strong in 2019 (over 36,000 sales.)  Investors (house flippers) are still buying at record rates. 

Another positive impact on home values is the new “Rent Control” law.  Though rent control sounds like it would be problematic for landlords, it actually may cause housing to go up in value.  That’s because the State of California will allow 7.5% to 8% rent increases annually, which is higher than average.  With rental property values being tied to the rent collected as well as rent itself becoming more and more costly, property values should increase with more buyers looking for investment properties as well as those who would rather buy than rent.

Overall, I predict that 2020 will bring a good housing market with steady increases throughout the year.  If you’re in the market (meaning you own real estate), stay in it.  Some “rules”:

  1. If you sell, buy something again right away.  Don’t play the real estate market.  Downturns are unpredictable and short-lived.  And increases are so significant that those trying to wait for price decreases can get stuck unable to get back in the market, if the pendulum swings the other way.
  2. If you want to buy, don’t wait.  If the market goes down, it’ll likely be due to interest rates going up.  Home values will come back if they go down; interest rates probably won’t go down again in our lifetimes.
  3. If you want to do a cash-out refinance (where you take money out of your home), make sure you leave enough equity in your home to avoid owing more than your home is ever worth.  I suggest you keep at least 30% equity (translates to 70% loan-to-value or LTV).  If refinancing means you’ll be below 30%, don’t take cash out.  Your home is your most important asset.

Ultimately, you should never gamble with your home.  Investment properties?  Sure, take the risk.  Refinance them, buy more properties, and grow your wealth.  But your home is your home.  Don’t jeopardize it!

Final note:  If you like to monitor the value of your home, I’ve set up a website for you:  www.findmyhomevalue.org.  By entering your home address, you’ll receive an email monthly with your updated market valuation.  And if you think it’s wrong, let me know and I’ll help you revise it. 

Happy Holidays!

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