Low mortgage rates will boost prices in 2020, according to Fannie Mae

30-year fixed mortgage rate likely will average 3.7%, down from 3.9% in 2019

Fannie Mae raised its forecast for 2020 home-price gains, saying low mortgage rates and a strong labor market will pump up demand for properties.

Single-family home prices probably will increase at a 4.6% pace this year, Fannie Mae said in a forecast on Tuesday. That compares with the 4.1% advance for 2020 the mortgage giant predicted a month ago.

The forecast is based on the Federal Housing Finance Agency‘s home-price index that measures single-family homes purchased using conventional mortgages.

“Think about someone focused on the size of payment they can afford,” Doug Duncan, Fannie Mae’s chief economist, said in an interview. “If you hold the size of the payment constant and interest rate component shrinks, that give you some latitude to bid up prices. That’s what’s happening.”

Price gains will push the volume of mortgage originations used for home purchases to a record $1.37 trillion, Fannie Mae said.

The average U.S. rate for a 30-year fixed mortgage probably will be 3.7% in 2020 and 2021, according to the forecast. That compares with 3.9% in 2019 and 4.5% in 2018, Fannie Mae said.

The labor market will continue to be robust, the forecast said. The U.S. unemployment rate probably will average 3.8% in 2020, compared with a 50-year low of 3.7% in 2019, the mortgage financier said.

However, the market continues to grapple with a supply shortage.

The number of single-family homes for sale dropped to 1.45 million in November, the lowest level for that month in a data series that goes back to 1982, according to the National Association of Realtors. The U.S. has added 96.5 million people in the intervening years.

Help is one the way, though. December’s housing starts spiked to a 13-year high, according to government data. For all of 2020, builders are expected to break ground on 975,000 single-family homes, according to Fannie Mae’s forecast. That would be the highest since 2007.

“Builders are accelerating their production, but there’s a lot of pent-up demand from household formation,” Duncan said. “They’re not going to be able to make it up in the short run.”

If you are searching for a home, it’s important to stay in close contact with both your Realtor and your Lender to make sure that you are balancing the difference between rising home prices and decreasing interest rates - each of these can make a huge difference on your monthly payment and overall mortgage debt situation!

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Are more people moving out of Colorado than in? Maybe.

Inbound moves to Colorado last year dominated outbound moves by the largest margin since 2008, according to the 2019 Migration Patterns study from Atlas Van Lines.

Atlas handled 2,309 inbound moves by households to Colorado last year, which is on par with the 2,308 inbound moves measured in 2018. What changed was the number of outbound moves, which fell from 1,899 in 2018 to 1,852 in 2019.

That was enough to tip inbound moves to above 55% of the total, which qualified Colorado as an “inbound” state for the first time since 2008. From 2009-18, the state has been “balanced.”

The states with the highest share of inbound moves last year were Idaho at 62.3%, Washington at 60.5%, North Carolina at 59.3%, and New Mexico at 59%. The states where people are packing up and heading out at the highest rate were New York at 62.7%, West Virginia at 62.5%, South Dakota at 61.7% and Illinois at 61.4%.

It’s worth noting that Atlas is just one of several moving companies available. Also, many young adults starting out travel light and don’t require a moving company. That might explain why Colorado, a top state for relocating millennials, showed as a balanced state despite strong net migration in its favor.

If you are thinking about making a move into, out of, or around Colorado…we are here to help! Our team knows amazing agents across North America, and we would love to connect you to make sure that your move is as smooth as possible! Start here.

Inventory is Low and More Colorado Homeowners are Staying Put for Now

Homebuyers in metro Denver will need to put aside visions of a more bountiful banquet of properties for sale in the new year.

Owners are staying home, literally, and that should keep them in control of the market going into 2020.

The inventory of homes and condos available for sale in metro Denver plunged 27.9% from November to December, a record monthly decline, according to the December Market Trends Report from the Denver Metro Association of Realtors.

“The main reason we saw fewer choices was not because more (homes) were going under contract or selling, but because nearly 30% fewer new listings came on the market in December compared to the month prior,” said Jill Schafer, chairwoman of the DMAR Market Trends Committee in a release accompanying the December report.

Normally, the housing market takes a breather for the holidays. The typical drop in the inventory of homes and condos for sale from November to December is 11.7%. So the 27.9% drop was off the charts, and it came despite a 1.7% drop in monthly sales.Metro Denver ended the year with 5,037 active listings, down 9.7% from December 2018 and only 41% of the 30-year average of 12,941 active listings at the end of December.After reaching a historic low of 3,854 listings in December 2017, the inventory of available properties for sale in metro Denver spiked 44.7% in late 2018 to 5,577, which came after a sharp rise in mortgage rates made it harder for buyers to afford homes.The Federal Reserve cut short-term rates last year, and mortgage rates moved lower, reviving the market.

Sales of homes and condos rose 10.7% in 2019, compared with 2018.Buyers came back out, but sellers pulled back significantly as the year came to a close. Sellers put up 5,425 homes and condos for sale in October, offered 3,651 new listings in November and cut that further to 2,558 in December.

Schafer notes that it would take only 1.13 months to sell all single-family homes available at the end of December and 1.37 months to sell all condos in the Denver area. For buyers to have a market in their favor, that time would need to get closer to four months, she said.

It is unclear if sellers aren’t as motivated, say because fewer of them are planning to leave metro Denver or to upgrade or to give up the super-low mortgage rate they have. Some could be waiting for a more opportune time to sell, which could contribute to a flood of listings this spring.

Metro Denver home prices rose to new highs in 2019, although the percentage gains were more muted than those of prior years. The median price of a single-family home sold in December was $450,000, up 4.65% from December 2018. The median price of a condo sold last month was $308,788, up 3.6% from December 2018.

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