It’s almost time to say farewell to 2019, and as we look forward to 2020, many are wondering what changes the new year will bring to the housing and mortgage industries. Low interest rates, low inventory, and a lack of affordability for first-time homebuyers are likely to stick around, but there are some changes on the horizon. Here are three trends expected to rise in 2020.
Finance technology is expected to make major strides in 2020. iBuyers are expanding their reach, exploring new markets, and looking to change completely the way real estate is bought and sold. An iBuyer is a company that instantly buys a seller’s home, fixes it up, and then sells it themselves. The seller can coordinate the closing dates to coincide with their next home purchase. Several companies currently offer iBuyer services, such as Opendoor, Zillow Offers, and RedfinNow, and several others are looking to expand to include iBuyer services. The trend is toward creating a one-stop-shop for home buying needs, with some of these companies also looking to integrate lending based products into their real estate offerings.
Big banks may get back in to FHA lending
The Departments of Justice and Housing and Urban Development are working to ensure better competition in FHA lending. In recent years, many big banks stepped away from FHA loans out of fear of severe punishments for errors. The federal government is now promising more appropriate remedies based on the severity of the violations. If more banks get back into FHA lending, borrowers should see lower costs and better service. This could prove especially good for first-time homebuyers, who are struggling with affordability in the current market.
Multiple offers could make a come back
The low supply of homes combined with high demand from buyers will combine to create, or continue, a seller’s market in most places. Interest rates are low, which makes it a great time to buy. Still, current homeowners, especially of the baby boomer generation, are expected to stay put in 2020, perpetuating the low inventory levels reported in 2019. A shortage of homes and an excess of motivated buyers are likely to lead to more bidding wars and multiple offer situations.