What’s in Store for 2020 for Real Estate and Beyond?

As the 2010’s come to an end, many folks are wondering what next year – and, in fact, what the next decade – will bring to residential real estate and the economy in general. These questions from our clients and friends compelled me to take particular interest in the first ever Real Estate Forecast Summit, held last month at the National Association of Realtors’ (NAR) headquarters in Washington, DC.
Economists gathered there concluded that the U.S. economy would continue to expand next year while projecting that real estate prices would rise and reiterating that a recession remains unlikely. Specifically, these 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. This came as good news as we recalled more significant recession warnings earlier in 2019. Further, the group expects an annual unemployment rate of 3.7% next year with a small rise to 3.9% in 2021. A little over 2/3 of these experts expected the Federal Reserve not to change the federal funds rate, while just under 1/3 expected another decrease.
While all of this is encouraging, as always I recommend that homeowners and prospective buyers not pay excessive attention to larger economic factors in coming to a decision on buying or selling. As the chart below illustrates, the residential real estate market in Arlington remained strong in 2019. And, as NAR Chief Economist Lawrence Yun stated at last month’s summit, “Real estate is on firm ground with little chance of price declines. 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.”

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