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.

The road less traveled has always been a little stranger and trust me, alternative data is a little strange. Buckle-up your seatbelts, it’s going to be a wild ride.

Data has always been a hot commodity. The digital world has made it easier than ever for investors to get their hands on all kinds of data. The problem is, if one person can gain access to a data set then nearly everyone else can too. So, how are investors supposed to get an edge over their competitors and make the best decisions in their power? Please welcome, alternative data to the stage.

First of all, what the heck is alternative data? According to alternativedata.org, it refers to “data used by investors to evaluate a company or investment that is not within their traditional data sources.” Alternative data is the road less traveled. It offers investors a way to add new and unique variables to the mix.

This data can be anything from private aircraft surveillance to satellite images of parking lots. Every bit of data that investors can gather to determine their next course of action has value. It gets wild, y’all.

In the oil and gas industry, one company uses helicopters decked out with infrared beams to estimate the amount of oil in storage tanks. It may sound like something out of a silly movie, but it’s actually quite clever.

So, is alternative data just an industry fad? Probably not, but what qualifies as this kind of data will evolve over time. As certain practices become more mainstream, they will lose that “alternative” edge. Kind of like when the band you’ve been following for years gets a hit song and now, they’re everyone’s favorite band.

What’s already clear is alternative data is not pixie dust. These creative data sets can provide an interesting insight, but it shouldn’t be the sole basis of any decisions. At the end of the day, alt data points are just more variables on the table. It’s best to not get caught up in the sexiness of private jets and satellites.

One thing is for sure, we will be seeing more creative uses of alternative data in the future.

“There is no shortage of buyers seeking homes,” said Dr. Lawrence Yun, chief economist at the National Association of Realtors (NAR), “but a lack of available units continues to drag down the nation’s housing market and overall economy.”

In response to the pending home sales index (PHSI) dipping 1.7% in October after two months of increases, Dr. Yun continues shining a light on tight inventory levels as a primary (and we would note, plaguing) factor in housing.

While pending home sales fell slightly from the previous month, they’re actually up 4.4% from October of last year in all regions of America. The PHSI rose in the Northeast 1.9% for the month, and fell 2.7% in the Midwest, 1.7% in the South, and 3.4% in the West. But for the year, the Northeast is up 3.0%, the Midwest rose 1.8%, the South jumped 5.1%, and the West spiked 7.5%.

This forward-looking indicator tracks contracts signed and is used to gauge the health of the market in coming months.

Dr. Yun noted that tight inventory is not the only challenge – mortgage rates rose slightly between September and October. “While contract signings have decreased, the overall economic landscape remains favorable,” he stated. “Mortgage rates continue to be low at below 4% – which will attract buyers – employment levels are strong and many recession claims have dissipated.”

That said, the Mortgage Bankers Association (MBA) reported today that mortgage applications for last week are actually up 1.5%, and with fluctuations this mild, there still appears to be optimism in the market.

“Mortgage rates stayed below 4 percent for the second straight week and borrowers responded positively,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Dr. Yun concludes with sounding the warning bell, making it clear that if we do not address inventory levels, current homebuilding won’t be able to support the expanding population in the coming decades.

For now, however, Kan points out that “with roughly five weeks of reporting data left in 2019, the mortgage market is on track for its best year for originations since 2007.”