Real Estate Market Outlook for 2020

Despite several fluctuations and rumors, the US real estate market is still going strong and 2020 has the potential of becoming a good year for investors. After the global tensions of 2019 and the partial government lockdown, mortgage rates are finally retreating and housing could play a major role in boosting GDP growth. But how can investors make the most out of these positive changes and what trends should they know about?

A revitalized market sparks competition

Mortgage rates started to drop last year and, in 2020, we will see their full impact. According to the National Association of Realtors, the median sale price of an existing home will grow slightly, to $270,400. Combined with the decreasing mortgage rates, this will generate more competition and we could even see a return of the famous “bidding wars” in the first quarter – which can only be good news for investors, but tricky for buyers, who might have to wait until the end of the year for more listings.

Millennials will be the driving force

According to Realtor.com, Millennials stand out as the main demographic in 2020 and they will account for more than 50% of all home purchase mortgages. Understanding their expectations is important for investors who want to make a profit: unimpressed by small city apartments, Millennials will instead invest in large suburban homes, with safe neighborhoods, good schools, and excellent public transport hubs.

Lower corporate rate tax to bring new opportunities for investors

Real estate investors have benefited greatly from the new 2018 tax laws, and this will go on in 2020. Apart from the 20% tax deduction, the significant decrease in corporate rate tax is also something to consider. By setting up their business as a corporation, investors can save an additional 14%, so we can expect more of them to choose this path. Since many tax benefits stipulated in the new laws will expire in 2025, this is the year when most investors will plan out their strategy and choose the business structure that works best for them (LLC, C Corp, S Corp, Sole Proprietorship).  

Most lucrative real estate markets in 2020

According to industrialist and philanthropist Andrew Carnegie, 90% of American millionaires built their wealth from real estate and, to this day, real estate investments still hold up. But, even though real estate has the potential of making you rich, investors still need to pay attention to a few factors, location being the most important. From this point of view, 2020 will bring some interesting changes. The National Association of Realtors identified 10 markets that will outpace the rest of the country in terms of home price appreciation, and this is where investors should focus their attention: Ogden, Utah; Las Vegas; Fort Collins, Colo.; Colorado Springs; Dallas/Fort Worth; Columbus, Ohio; Raleigh/Durham/Chapel Hill, N.C.; Charlotte; Charleston, S.C.; and Tampa/St. Petersburg, Fla. A new report from Realtor.com also found that buyers are staying clear of big cities and moving to smaller, more affordable cities.



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