US Home Price Gains to Accelerate through 2020

PTC-Computer-Solutions-Parker-Associates-blog-October-2019-low-mortgage-rate

Mortgage Rates to Stay Low

PTC-Computer-Solutions-Parker-Associates-blog-October-2019-mortgage-at-low-rate-n
PTC-Computer-Solutions-Parker-Associates-blog-October-2019-mortgage-at-low-rate-n

According to recent information from experts, U.S. home-price gains will accelerate through 2020. This source goes on to state that mortgage rates likely will stay below 4% through 2020. The team here at Parker Associates agrees that the market continues to look favorable for growth. Reflecting the information from CoreLogic’s Chief Economist, Frank Nothaft who continued by stating that the pace of home-price gains will quicken over the next 12 months as low mortgage rates give buyers the ability to pay more for properties.

Home prices probably will increase 5.8% in the 12 months through August 2020, Nothaft said in an exclusive interview with HousingWire. That’s a faster pace than the 3.6% growth seen in August 2019 from earlier this year. In further statements, rates for fixed mortgages will probably stay below 4% through the end of 2020. Cheap financing allows homebuyers to qualify for a bigger loan because the amount they can borrow is based on their monthly payment, which drops as financing costs fall.

PTC-Computer-Solutions-Parker-Associates-blog-October-2019-home-prices-accelerate-you-wont-believe-where
PTC-Computer-Solutions-Parker-Associates-blog-October-2019-home-prices-accelerate-you-wont-believe-where

“We’re in a very special environment for housing demand – for the first time since at least World War II we have mortgage rates below 4% while at the same time the unemployment rate is below 4%,” Nothaft said. “That’s a golden period that will stimulate activity, and we expect sub-4 mortgage rates and sub-4 unemployment rate through at least the end of 2020.”

The trade war that’s been the main driver of a global economic slowdown won’t necessarily cause a recession in the U.S., Nothaft said. Economic activity will slow in the U.S., he said, but it probably won’t contract. A recession is defined as negative GDP for two subsequent quarters.

PTC-Computer-Solutions-Parker-Associates-blog-October-2019-low-mortgage-rate
PTC-Computer-Solutions-Parker-Associates-blog-October-2019-low-mortgage-rate

“The slowdown of the global economy, mainly related to the trade war, could be enough of a trigger to push the U.S. into recession, but I don’t think that will happen,” said Nothaft, who put the odds of a recession in 2020 at “one in three,” or 33%.

Nothaft said he expects U.S. GDP will grow by about 2% next year. “That’s sufficient to create jobs and keep the unemployment rate below 4%,” he said. The impeachment inquiry Congress opened last week probably won’t have an effect on mortgage rates, Nothaft said. Though, if it does, it might lead to rates going even lower, he said.

“If it leads to some sort of crisis, that’s going to lead to a flight to quality in the capital markets, and perhaps a big downturn in the stock market that could be negative for the overall economy,” Nothaft said. When investors start looking for assets they perceive to be “safe harbors,” it often benefits home-loan rates by increasing competition among bond investors. However, the event that caused that so-called flight to safety could damage the economy and stall the jobs market, which would limit the number of people able to qualify for a home loan.

Graph of the housing market
Graph of the housing market

“It’s possible that a year from now there could be a full-blown crisis in the Middle East that’s going to cause oil prices to skyrocket and trigger a recession, but absent something like that, we see a real golden period for housing through at least the next year,” Nothaft said.

Parker Associates follows the latest news and information in the industry so that we can stay on top of the changes that will affect our industry. There are many factors that are reliant on the economy and what is happening in the market both locally and globally. This effects the consumer market and the positioning. We have a time tested method of product positioning.  Parker Associates bases product positioning on specific consumer preferences from current surveys and focus groups published by industry periodicals and reports, or direct consumer interaction designed and carried out by Parker Associates experts and contractors. It is too important for guesswork or client opinions.

David WB Parker is a principal of Parker Associates of Jacksonville, Florida, marketing consultants to the real estate industry; President of PTC Computer Solutions, IT Specialist, and an active real estate sales professional with Barclay’s Real Estate Group based in Jacksonville, FL.  He is also a principal partner of the REMA Team of professionals. He can be reached at 904-607-8763 or via email davidp@ptccomputersolutions.com.

Share this Parker Associates - PTC Computer Solutions Blog Post:
  • Print
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • Blogosphere
  • Google Buzz
  • LinkedIn
  • Orkut
  • Reddit
  • RSS