Real Estate Market Predictions for 2020 by kim kiyosaki

Real Estate Market Predictions for 2020

There are 6 important things to think about when investing in rental properties this year

Is one of your 2020 New Year’s resolutions to finally dip your toe into the real estate investing pool? Or do you already have some investments and are wondering what’s in store for the industry this year? As you can imagine, given my own substantial real estate investment portfolio, I’ve been keeping a close eye on various reports and predictions for 2020.

6 real estate market predictions

Here’s a brief recap of some of the information I’m seeing, as it will help all of us make more informed decisions when it comes to evaluating new investment opportunities this year:

  1. Record-breaking low mortgage rates

    While the global outbreak of COVID-19, aka the coronavirus, certainly isn’t good news, it is making for more favorable real estate investment conditions. The Federal Reserve enacted is first emergency move since 2008 and slashed mortgage rates.

    In fact, as I write this blog, rates for a 30-year mortgage in the U.S. tumbled to the lowest on record. The average mortgage rate is 3.29%, down 3.45% from last week — and the lowest since Freddie Mac started tracking this data 49 years ago. In case you’re curious, the previous low was 3.31%, back in November of 2012.

    It’s unlikely to dip below 3%, so I predict a house-buying boom this spring. It’s also the perfect time to refinance any current investment properties (or your primary residence) and get a less expensive loan.

  2. Real estate inventory shortage

    Look around — are you seeing new residential housing developments going up? Probably not very many. Inventory of homes remains low this year (just like 2019), as increased costs of labor means a lack of new housing projects.

    Freddie Mac reported that America’s housing market is undersupplied by 3.3 million units and the shortage is increasing by roughly 300,000 units a year. Plus, natural disasters took some housing off the market in 2018 (15,000 homes were destroyed by the California wildfires and still others were destroyed by hurricanes and floods).

    So what’s at the root of this real estate inventory shortage? The housing crash over a decade ago — many homebuilding companies went under. And what little building is going on, is geared toward the higher-end housing because the margins are more attractive, leaving millennials and other first-time homebuyers priced out of the market. Simply put, there aren’t enough new housing options to keep up with the demand, and this is leading to rising housing costs.

    With such a low home inventory, you may have to lower your expectations of what you’re looking for or be prepared to shell out more money than you were planning to in order to purchase real estate. Even then, expect bidding wars thanks to the increased competition.

  3. Suburbs on the rise

    With housing prices rising in major cities, many people are having to bite the bullet and move out to the ‘burbs — but that doesn’t necessarily mean they’ll have to endure a longer commute. Tech companies, for instance, are starting to move to secondary markets where millennials can afford to live. So, it stands to reason that those areas will keep on gaining population.

  4. Great rental market

    So what happens to all those people who can’t afford to buy a new house because of rising costs and lack of inventory? They rent, of course! This positive rental market is great news for landlords, as there won’t be as much concern over vacancy.

  5. Attract renters with amenities

    One way to attract new tenants to your rental property is by choosing your amenities wisely. Renters are looking for upgrades like keyless locks, smart thermostats and doorbell cameras, open floor plans, stainless steel appliances, in-unit laundry, media rooms, secure parking and online rent pay. You’ll want to explore these options, checking out competitors in your market, and then decide what will attract the right renters to your investment property.

  6. It’s an election year, so all bets are off

    Now, a quick word of caution: my real estate market predictions for 2020 could be affected by the upcoming presidential election. This whole year could mean a lengthy period of uncertainty in many sectors, including the housing market. People are generally more hesitant during election years, relying on more conservative wait-and-see approaches about the economy and their jobs. So, sales may decrease (which could open up some opportunity for you in this limited-inventory market), however pricing is not likely to follow suit.

Resources to help you dive into the rental market

Since I don’t have a crystal ball, these are merely housing market predictions based on everything I’ve read and all my experiences over the decades. Honestly, it’s impossible to say what will really happen with any certainty. That’s why it’s important to follow the market closely and become familiar with neighborhoods, city trends, and the available inventory in your town. You’ll also want to study up on real estate investing as a whole, to make sure it’s the right decision for you.

I’d suggest starting the process by reading a few of my past real estate investment blogs. I’ve selected some of the most popular ones, which cover a wide array of topics:

  1. Don’t know where to begin looking for the perfect investment opportunities? Check out How to Find the Best Real Estate Investment Deals to see where they’re all “hiding” — yes, even with this current housing shortage, they’re out there.

  2. Getting Started in Real Estate helps you say goodbye to the dreaded analysis paralysis and say hello to the financial freedom you crave. In this blog, you’ll learn about some unexpected real estate investment opportunities (spoiler alert: mobile homes are an inexpensive option you probably haven’t considered!).

  3. In 6 Ways to Find Investing Money for Beginners, I help dispel the myth that you need to use your own money as a down payment for your first investment property (or any type of investment, really). Once you realize that money isn’t holding you back from your investment dreams, the sky’s the limit. So, if a lack of money is your excuse, don’t miss the tips.

  4. I think real estate investing is the bee’s knees, but that doesn’t mean it’s for everybody. In The (Many) Pros and (Few) Cons of Real Estate Investing, I delve into the reasons why I love it so much. But I also don’t like to sugar-coat things, so I’ve also included some of the disadvantages that may not be as appealing, depending on your situation.

  5. Too many first-time investors think the saying, “go big or go home” applies when it comes to starting out in real estate. It does not. In Starting Small: 3 Tips for New Investors, I encourage you to truly start small and build your confidence through first-hand experience and education.

The more you read and learn (hey, I still do it every day!), the more confident you’ll be about not only recognizing, but jumping on a great real estate investment opportunity the moment one comes your way. And if my real estate predictions for 2020 are any indication of how things will play out, you’ll need to jump fast.

Original publish date: January 31, 2019