A recession may be coming in 2020, but real estate markets likely won’t be the cause of it.
According to a report from Zillow, the Federal Reserve’s decisions about U.S. monetary policy will be the next recession’s main cause, not housing. The report states that “meaningfully higher interest rates should eventually slow the frenetic pace of home value appreciation.”
Will real estate be a good investment in 2020?
Next year might be a good time to purchase new investment properties because housing prices might rise much more slowly, as long as you’re the first in line to scoop up quality real estate and you’re prepared to outlast the recession that follows.
What will be the best real estate market to invest in?
A private report from the Urban Land Institute predicts that Austin, Raleigh-Durham, Nashville, Charlotte, and Boston will be the top five real estate markets to invest in.
1. Austin: This Texas capital city took the top spot in the report, thanks to its “deep pool of talent, unique and popular lifestyle, and ambitious commitment to business and real estate expansion.”
2. Raleigh-Durham: The real estate market in North Carolina’s Triangle is expected to boom next year, thanks to its being a hub in the Southeast for education — the University of North Carolina, Duke University, North Carolina State University, and several colleges call this region home — as well as new technology.
The report described Raleigh-Durham as a “technology mecca” with “more than 89,000 tech jobs, which, at 10.9 percent of the employment base, ranks third behind Silicon Valley and San Francisco in tech industry share.”
3. Nashville: The report credits the Tennessee capital city’s growing home base for large corporations as a contributing factor to its increased investor confidence and real estate activity.
4. Charlotte: With a commitment to improving infrastructure, expanding its airport and light rail system, and diversifying its economy in the technology and manufacturing sectors, this North Carolina city is becoming a hotbed for new real estate investment.
5. Boston: This Massachusetts metropolis is well known for its excellent educational institutions and influence in the global technology industry. It continues to attract talent and new investments from around the world, contributing to its continuously high real estate investment activity.
Will real estate prices go down in 2020?
Real estate prices likely won’t go down if a recession happens next year. On the contrary, real estate economists predict they’ll go up ever so slightly, only 2.8 percent nationally, according to the Zillow report.
That’s much slower appreciation than what they’ve seen over the past few years. This should be a welcoming sign to some new real estate investors.
Will mortgage rates go down in 2020?
Some predict that mortgage rates will go down slightly in 2020. Mortgage loan company Freddie Mac thinks rates for 30-year fixed-rate mortgages will dip ever so slightly to 3.7 percent in 2020 from 3.9 percent in 2019.
The bottom line
Predicting real estate investment climates from year to year is no easy task, with so many regional markets to keep track of against the backdrop of the national and global housing economy.
Real estate investing in 2020 should be ideal for some investors looking to buy new property, thanks to slower appreciation overall and, perhaps, slightly lower fixed mortgage rates.
If you’d like to know more about investing in real estate, head over to this article.