if you are curious about what the real estate market will be like in 2020 you are in luck. A group of top economists who recently attended a consensus 2020 economic and real estate conference at the National Association of Realtors’ first-ever Real Estate Forecast Summit offered insight into the 2020 real estate market, according to a NAR news release.
The economists who gathered at NAR’s Washington, D.C. headquarters in December said they expect the U.S. economy to continue expanding in 2020 while projecting real estate prices will rise and reiterating that a recession remains unlikely.
By the Numbers
The news release said the economists predicted a 29% probability of a recession in 2020 with forecasted Gross Domestic Product growth of 2.0% in 2020 and 1.9% in 2021. The group expects an annual unemployment rate of 3.7% next year with a small rise to 3.9% in 2021.
When asked if the Federal Open Market Committee will change the federal funds rate in 2020, 69% of the economists said they expect no change, while 31% expect the committee will lower the rate next year, the release added.
The average annual 30-year fixed mortgage rates of 3.8% and 4.0% are expected for 2020 and 2021, respectively. Annual median home prices are forecasted to increase by 3.6% in 2020 and by 3.5% in 2021.
“Real estate is on firm ground with little chance of price declines,” said NAR’s Chief Economist Lawrence Yun in the news release. “However in order for the market to be healthier, more supply is needed to assure home prices, as well as rents, do not consistently outgrow income gains.”
What to Expect
Apartment rents are expected to rise by 3.8% and 3.6%, respectively, in 2020 and 2021. According to the group of economists, annual commercial real estate prices will climb 3.6% in 2020 and 3.4% in 2021.
“Residential and commercial real estate investment remains attractive as we approach the start of a new decade,” said NAR President Vince Malta, a broker at Malta & Co., Inc., in San Francisco via the same news release. “Increased home building can serve as a stimulator for the overall economy, and we strongly encourage more homes to be built as buyer demand remains strong.”
The 2019 NAR Real Estate Forecast Summit consensus forecasts are compiled as averages of the responses of 14 leading economists who participated during the summit. The survey was conducted from Dec. 2-5, 2019.
The National Association of Realtors says it is a trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.
Source: National Association of Realtors