Midwinter’s lowest mortgage rates in history drove a January jump in purchasing homes. That spike could result in higher home prices in the coming months.
That projection comes from Redfin, a technology-powered real estate brokerage. “With every new release of data this year, I'm becoming more and more confident that demand will be strong in 2020—just as strong as, if not stronger than, in 2018 and 2017," said Redfin chief economist Daryl Fairweather. "The big question for the housing market this year is supply.Will homeowners sit on the sidelines, content with their refinanced loans, or will they want to get in on the action too and move up, move down, or cash out entirely?”
Unless a lot of new housing inventory hits the market soon,the 10-year peak in home buying demand, coupled with a 20-year low in the numbers of homes for sale, will lead the housing market straight into the mother of all inventory crunches. That could result in a sudden and rapid rise in bidding wars and spiking home prices.
Fairweather said home construction is beginning to pick up in some markets as well. “so even without new listings of existing homes, there will be some relief for home buyers hoping for more selection. However, due to the high cost of acquiring and developing land in expensive coastal cities,much of that new construction will be built far away from urban centers or in already affordable metros," he added.
To learn more about what low rates and low housing supply mean, read the Redfin forecast.