The housing market will improve in 2020

Heading into the tank for eight years, the housing market is finally near normal. By 2019, the sales of existing homes likely to match or top an average of 1999-2002, before the purchase frenzy seized the US rental market has been strong multi-family residential buildings returned to historical levels.

The big exception is the new single-family homes. the construction and sale of their runs in only 50% of its pre-bubble levels, and to at least a couple of reasons for lagging demand in 2019, they will not restore these specifications: new homes tend to be more expensive than the old, limit the pool of buyers and credit purchases. The lack of first-time buyers of existing homes mean fewer owners can sell and move up to a bigger, more expensive home.

However, supply is a constraint. Builders can not keep up with the current mute level even if there is a demand, according to real estate agency. These days, National Association, a new home is usually located on the market for just three months and the past four or five. There is not enough skilled workers: when carpenters, framers and others who left the field in droves, the bubble burst. Too little gathered a lot of preparation. It needs to prepare the site of 15-36 months building roads, water and sewer, bringing electricity, coupled with regulatory obstacles to the settlement. In some places, jumping through regulatory hoops alone can take up to seven years. To make matters W¯¯ORSE, many lenders, paranoia housing prices after the steep plunge, have been reluctant to lend the original land development. Therefore, only the financial strength of the manufacturers to create new segments. While all of these pressures are easing, it will take time for them to disappear.

At the same time, the housing market as a whole, several positive at work: Credit is no longer a difficult thing. In the next six months the survey is expected to improve access to credit at prime borrowers (620~720 FICO score) half of the mortgages. Lenders become more comfortable standard can be offloaded to Fannie Mae and Freddie Mac loans, to relieve their concerns. (Mortgages parallel rules can be securitized and sold to kick in next year.) Thus, there are more flexibility loan debt from 5% to Fannie- and Freddie Mac to meet the requirements of to-income ratio, and the minimum down payment slip, for example, 3%.

Of course, compared with the boom, or more difficult to obtain a mortgage. Half or to the borrower’s FICO score above 740 on a mortgage, although this ratio to 60%, so that borrowers accounted for 2019 is better, it is much lower than in the early 2000s, when the average score of 680 borrowers. US Federal Reserve Board in July stricter compile lesson plans approach to bank loans half of the senior loan officer opinion survey shows that the condition is considered to be more stringent than average mortgage loan officers.

Further help is higher incomes and employment; more consumers can afford to buy. In addition, there are more 100-meter layer of years of potential buyers Generally, the backlog is still living with their parents than younger people, but their desire to strike out, as soon as possible. Mortgage rates will remain moderate, although it may slow climb in the coming year.

As for prices, we hope that they will increase more slowly in 2020, and now from the first recession pendulum swing improvement has ended, investors seek better returns elsewhere.