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Real Estate Big Data

Looking into the crystal ball – 2020 housing forecast

(REAL ESTATE BIG DATA) Housing in America is about to change significantly as the millennials begin purchasing their first house and the market changes to meet them.

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Housing neighborhood

In 2020, Millennials will be taking on the majority of home mortgages and shape the housing market, that according to Realtor.com’s national housing forecast for 2020.

The report dispels the myth that Millennials want walkability and avocado toast. The report states that in 2020 the group will take on more mortgages than Boomers and Gen X – combined. And, they will be plunking down serious cash, with larger down payments than ever.

While Millennials will be buying homes in the burbs, willing to drive the kids to school, and shaping the market, in general the forecast is for a tight market, with a flat increase in sales.

The coming year is going to be a mixed bag.

Economy and Global Market Influence

During 2019, consumers were still feeling good about the economy, leading to a 4.6% annualized gain in consumer spending, yet businesses were not as confident by the second quarter and resulted in a 1% drop in investment. Trade disputes between the US and its trade partners resulted in an escalation in tariffs and increased uncertainty.

At the start of 2019, the Federal Reserve initially tightened its belt because the economy seemed to be on an expansionary track, but it switched tactics later in the year as it became clear major economies around the globe were slowing and as a result cutting rates and purchasing assets to boost output, according to the report.

In 2020, GDP growth is expected to be modest with a 1.7% advance, according to the report. As housing expenses continue to rise, consumers will spend less on non-housing related purchases. Slowing consumer spending, coupled with global uncertainty and a volatile world market is expected to cause businesses to trim employment goals and control costs. Unemployment is expected to rise slightly from 3.6% to 3.9% by the end of 2020. Meanwhile, inflation is expected to remain restrained with a 2.0% year-over-year increase.

Housing Supply

Home buyers were searching for more affordable housing choices in 2019 and as a result there was a housing buildup around the country, with the number of homes available rising 7% on a yearly basis, the fastest pace of growth since 2014. As the year wore on buyers became frustrated with the costs of housing, but then mortgage rates dropped in March and many buyers were able to get into the market thanks to the shift and the reliance on financing, according to the report.

“In 2020, we expect inventory to struggle to grow and could instead reach a historic low level. The yearly declines are likely to be moderate and range between 1%-to-5 % for most of the year. A steady flow of demand, and robust-yet-declining seller sentiment will combine to ensure there is no surplus adequately-priced inventory,” the report stated.

Demand for housing will remain strong in 2020, particularly in the entry level. Millennials will be turning 30 and will make up the largest group entering the market. And, they will take more than half of all mortgages in 2020, the Realtor.com forecast stated.

Home sales are expected to remain flat in 2020, even as demand remains strong. With consumers sensing a cooling economy in the coming year, it’s expected that home sales will dip 1.8%, as supply remains short, price growth is going to remain restrained. The decline in sales will be tied to flat price growth. Prices are expected to rise 0.8% in 2020.

Buying in 2020 is going to present a mix for consumers as there will be more opportunities to find new construction at flattened prices, yet it will depend on the market they search and finding one with fewer barriers to entry. The report describes it as “Marco Polo” while it may be easier to qualify for loans, it may be harder to find a home.

Sellers are going to need to price it right to sell it. Homebuyers are on the hunt for affordable properties, so those homes in a higher price range will need to relax prices or provide incentives to encourage sales.

The trend of searching for affordable housing will continue as Millennials leave the urban centers behind for homes for families and Boomers retire to sunnier communities, with lower taxes and lower cost of living. Texas, Arizona and Nevada could benefit from homebuyers looking for affordability. Meanwhile, Georgia, Florida and the Carolinas may see more relocations from folks leaving the expensive and cold Northeast behind.

Mary Ann Lopez earned her MA in print journalism from the University of Colorado and has worked in print and digital media. After taking a break to give back as a Teach for America corps member and teaching science for a few years, she is back with her first love: writing. When she's not writing stories, reading five books at once, or watching The Great British Bakeoff, she is walking her dog Sadie and hanging with her cats, Bella, Bubba, and Kiki. She is one cat short of full cat lady status and plans to keep it that way.

Real Estate Big Data

Are you selling real estate in a high-cancer-risk area?

(BIG DATA) If you own a brokerage knowing your local ecosystem can be beneficial. Whether it’s a humble brag on your blog, or a letter to a local rep, knowing your environment is always a good idea.

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Check your housing environment for cancer risk and support your area.

As a realtor or brokerage owner, you know the importance of understanding your community’s ecosystem in order to shape your business strategy.

However, have you considered how environmental and quality may play a role in those decisions?

This study published in Cancer suggests that you should. According to the study, “of every 100,000 Americans, 451 of us will get cancer in a given year.” The study “found a difference of 39 cases (per 100,000) people, between areas with the highest and the lowest environmental quality.

This establishes a significant link between environmental qualities and cancer risks.

The study also showcases a map of the US and the air quality of various regions. Red and orange areas have the worst air quality, while blue and green areas have the best air quality. As you might expect, large metropolitan areas have the worst air quality, and things improve as you move into more rural areas. You do find the most exceptions throughout the southeastern region and a vertical stretch that runs from the tip of Texas to the Dakotas up north.

These kinds of signs can either be a major benefit or a major obstacle to attracting buyers to your real estate market.

According to the most recent Gallup polls, 47 percent of Americans worry a great deal about the quality of the environment. So, how do you adjust?

If you’re in a blue or green area, make sure to get the word out! People now consider environmental quality as part of the quality of life factor. Don’t let that benefit go unnoticed. Blog about it on your own website. Use your social media to share data like this from other sources, or other information praising the environmental quality and protections of your market.

Integrate it into your marketing materials where possible.

If you’re in a red or orange area, you’ve got a bit more work to do here, and it’s going to get a bit political. There is already plenty of concern about attempts at the federal level to handicap agencies dedicated to protecting the environment. Be wary of such measures at the state and city level, and be a voice for the real estate economy in shaping this policy.

Does going to places of legislative businesses give you the heebie-jeebies? Find local organizations dedicated to improving environmental quality. Sponsor a river or park clean up event. Show your support for events like Earth Day. Don’t have those kinds of events? Harness your entrepreneurial spirit and bring these events to your community. Taking action as a community leader will be massively beneficial for your brand.

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Real Estate Big Data

Demand for urban vs. suburban housing remains even (unless you’re in SF)

(REAL ESTATE BIG DATA) Most would assume that housing market trends would show people moving out of cities and into the suburbs following COVID restrictions. But the demand for both has stayed surprisingly even.

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Houses part of the housing market against a blue sky.

Despite what most people think, the suburban housing market isn’t completely leaving the urban market behind in the dust. According to a 2020 Zillow Urban-Suburban Market Report, data shows both markets are “hot sellers.” To illustrate this trend, Zillow’s Economic Research team analyzed various points related to for-sale listings.

Data shows homes in both areas are selling quicker than they were at the beginning of the year. The trend of houses selling above their listed prices and home value growth has accelerated at about the same pace for both markets.

With the exception of the Northeast region, national year-over-year (YoY) pending sales trends are almost even across urban classifications since February. Due to a smaller urban inventory pool at the start of the pandemic, this might account for the slower acceleration rates of sales in the Northeastern states.

On Zillow, suburban homes are receiving about the same attention as they did in 2019, and “urban and rural page views each climbed 0.2 percentage points from last year.” Suburb listings do attract more traffic on Zillow, but urban listings are still holding their ground.

Based on home characteristics, there isn’t a higher demand for single-family homes versus condos. Overall, this means the urban market is still attracting an audience.

However, this isn’t true in all cases. The San Francisco metro area falls out of these patterns. A great increase of listings are just sitting on the market. With an inventory up 96% YoY, this is a significant jump compared to the surrounding suburbs. Sellers are flooding the market, but buyers haven’t changed their purchasing pace.

According to Bay Area Market Reports, “With the increase in inventory has come a big jump in the number of listings reducing asking price. In some market segments, sellers are now competing for buyers, instead of buyers competing for listings.”

Although “San Francisco list prices have fallen 4.9% YoY,” there aren’t enough people buying in that housing market. With more tech companies like Google and Facebook allowing employees to work remote, hundreds of employees are leaving the city. And with them, will renters and buyers that aren’t renewing their leases look elsewhere to settle down?

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Real Estate Big Data

Top 30 ‘work from home’ counties in U.S. ranked (Texas beat all y’all, btw)

(REAL ESTATE) NAR examines the shift in purchase decisions based on a rapidly changing workforce to work from home, and of course, Texas dominates the top 30. Maybe not the top 10, but the top 30.

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We typically ignore all of the new, rushed rankings of geographies during the COVID-times, but the National Association of Realtors (NAR) just put out a well thought out argument for their top 30 counties for working from home, taking into account internet connectivity, the percentage of workers in office-related jobs, home affordability, urbanization, and a county’s population growth.

Not to be a conspiracy theorist, but the top 10 looks like a map of the old Big 12 football conference schedule back when it was the Southwest Conference, just saying…

The report analyzes the aforementioned factors that “support the remote work trend,” which we firmly believe will drive real estate purchases for years to come as employers begin implementing more permanent flex work options.

Texas leads all states with 7 counties among the top 30, but for the sake of fairness, here is the top 10, in which we painfully acknowledge Georgia as the top spot stealer:

  1. Forsyth County, Georgia
  2. Douglas County, Colorado
  3. Los Alamos County, New Mexico
  4. Collin County, Texas
  5. Loudoun County, Virginia
  6. Hamilton County, Indiana
  7. Williamson County, Tennessee
  8. Delaware County, Ohio
  9. Broomfield County, Colorado
  10. Dallas County, Iowa

“The coronavirus pandemic greatly accelerated the number of workers who are able to work from home,” notes NAR Chief Economist, Dr. Lawrence Yun. “Possibly a quarter of the labor force may be permitted to work from anywhere outside of the office even after a vaccine is discovered – compared to only 5% prior to the pandemic – and this will greatly change the landscape of where people buy homes.”

NAR President Vince Malta observes that location options are not the only changes for potential homebuyers, but that as remote work becomes more commonplace, “we may see buyers seek larger properties that offer space for a potential home office and other features that have become more valuable as a result of this pandemic.” Aha!

Malta adds, “The growing trend and historically-low mortgage rates are spurring potential homebuyers to consider a broader range of options and rethink what’s important to them in the long term.”

In a statement, NAR indicates, “The growing number of people working remotely also impacts commercial real estate, particularly the office sector, with future office sizes and locations potentially changing as a result.”

Dr. Yun states that the future of commercial real estate “appears uncertain” as companies reorganize “from having a central business district headquarters to several suburban satellite offices.”

The bright spot, however, is retail. “One can reasonably expect to see some growth in the number of smaller stores in the top 30 counties coming at the expense of similar establishments near downtown office buildings,” Dr. Yun concluded.


Below is a breakdown of their methodology:
nar work from home

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