Page 36 - EQ Mag-issue 5

FIRST-TIME HOMEBUYER RESOURCE (Cont’d)
“Low interest rates and a shortage of starter homes
will continue to push up prices,” DeFranco said. “This
is especially the case for lower price points, since
builders have tended to focus on more expensive,
higher-profit houses and less on replenishing low
inventories of entry-level homes.”
It seems the price growth may continue beyond 2020,
too. Data from Arch MI shows the chance of home
price declines at a mere 11% for the next two years.
INVENTORY WILL BE TIGHT.
Housing inventory is going to remain limited for
much of 2020, experts say. And interest rates and
record-high homeownership tenures are a big part of
the problem.
“While historically low rates increase buying power
and make it more likely for potential buyers to attain
their homeownership dream, they also increase the
risk of a long-run housing supply shortage, which we
predict will continue through 2020 and possibly
intensify,” Kushi says. “As first-time buyers lock-in
these historically amazing rates and existing owners
refinance—in droves in recent months, everyone will
stay put and not sell. Where’s the incentive?”
MILLENNIALS WILL KEEP UP THEIR HOMEBUYING
STREAK, WHILE BOOMERS HOLD UP INVENTORY.
Data from Realtor.com shows Millennials made up a
whopping 46% of all mortgage originations in
September—up from 43% one year prior.
Meanwhile, shares of Baby Boomer and Gen X
mortgage activity declined.
It’s no wonder, either. Millennials rank
homeownership as one of their top goals in
life—higher than even marrying or having kids—and
with interest rates low and incomes up, it’s the right
time to buy a home for many.
Unfortunately, they face an uphill battle. As Kushi
explains, “Looking ahead, Millennials may be
entering a tougher housing market in 2020. A limited
supply environment, combined with growing
demand and increased competition for homes, is
accelerating home price growth once again.”
As Kushi puts it, “The fate of Millennial homebuying
to close out 2019 and into 2020 will depend on two
factors: if there is anything for them to buy, and
whether rising purchasing power stemming from
increasing income and historically low mortgage
35 | www.equitymovement247.com
rates can continue to outpace house price
appreciation.”
THE SUBURBS WILL BE A BIG DRAW THANKS TO
MILLENNIAL DEMAND.
As home prices skyrocket, cash-strapped Millennials
are looking toward more affordable places to put
down roots—namely smaller, suburban towns on the
outskirts of major metros.
The trend has led to an uptick in “Hipsturbia”
communities—live-work-play neighborhoods that
blend the safety and affordability of the suburbs with
the transit, walkability and 24-hour amenities of big
cities.
Melissa Gomez, an agent with ERA Top Service Realty
in New York, has seen the trend in action.
“Being based in the boroughs of NYC, I see Hipsturbia
happening every day,” she said. “As cities like New
York become increasingly expensive, younger people
and families are looking for more bang for their buck
with real estate, schooling and everything in
between. And slowly but surely, it is breathing new
life into small towns outside of major urban hubs.”
The Urban Land Institute recently named Histurbia as
one of its top real estate trends to watch in 2020.
As the report explains, “If the live-work-play formula
could revive inner cities a quarter-century ago, there
is no reason to think that it will not work in suburbs
with the right bones and the will to succeed.”
THE INDUSTRY WILL CONTINUE TO DIGITIZE.
The mortgage and real estate spheres have been
moving away from their manual, paper-laden
processes in recent years, and 2020 will only see that
trend expand further—especially as more tech-savvy
Millennials enter the market.
As Hundtofte explains, “In 2020, we’ll continue to see
Millennials growing their share of the mortgage
market, which in turn, will serve as a catalyst to
lenders to continue to rapidly innovate their
technology offerings to meet the expectations of an
audience more accustomed to an Amazon, Venmo-
like experience.”