Now that we’re almost to Thanksgiving, we find ourselves at the traditional moment when real estate’s soothsayers dust off their crystal balls and get busy. In the coming weeks, they will go to press with their projections, informed guesses, and unbridled hunches about how real estate will fare in the coming year.
Everyone contemplating Chicago real estate transactions in 2020 will be affected to some degree by shifts in the national disposition, so it’s always worth keeping an ear open to the experts’ conversations—their projections do influence what actually comes to pass (even if they’re ultimately off-target).
Last Friday’s Forbes release led the pack this year with Senior Contributor Aly Yale’s roundup of six opinions from Forbes-selected mortgage, real estate, and housing experts. For Chicago readers hoping to gain fresh insights about the coming year, the consensus views were less than electrifying: if any big changes are hovering over the horizon, the experts are keeping them on the q.t.
Throughout 2019, housing inventories have remained limited, in large part because people are choosing longer stays in their current homes. One study found that the average duration was 8 years in 2010—but is now 13 years. Says O. Kushi, chief economist for First American title insurer, “you can’t buy what’s not for sale;” hence, the cap on housing sales. The prediction for 2020? More of the same.
With interest rates low and incomes climbing, the share of younger buyers has been growing. Even so, it has still been an uphill battle due to higher prices and a dearth of starter homes. For 2020? Expect more price pressure. One prediction is an average price appreciation of 5.6% by next September (versus this year’s 3.5% rise).
This year, Chicago home loan rates fooled most of the experts, falling in line with the national monthly average with a drop of about 1%. Next year, they’re expected to “stay low—or maybe go lower.” The Mortgage Bankers Association concurs, projecting average rates of 3.7% to 3.9%. Freddie Mace “actually predicts rates…even lower”—3.5%-3.6%.
As we’ve seen many times, you can’t take predictions about interest rates “to the bank,” but they do have some value as calmatives—particularly when they’re like these, projecting advantageous conditions to come. Another advantageous idea is to give me a call when Chicago real estate matters are in your own future!