12/12/2019
Residential Real Estate 2020 Outlook
As 2019 draws to a close, we here at Fall Creek Homes would like to thank our customers, suppliers, and subcontractors for a wonderful year! A question that I am frequently asked as of late is âwhat will the real estate market be like in 2020?â So, without further ado, here is what I believe the market for residential real estate will be like here in our local market:
(1) Continuing low interest rates. As of today, a 30 year fixed interest rate is around 3.75% (3.865% APR), which is slightly lower than last year at this time. Some in the industry, such as Freddie Mac, are predicting that interest rates will go down even further in 2020, with 30 year fixed rates under 4%. Even if interest rates donât go down, current rates are incredibly favorable for those seeking to finance the purchase of a home.
(2) Tight marketâhigh demand/low inventory. The Snake River valley has certainly been discovered by neighboring states. Our proximity to countless venues for outdoor adventure, good schools, low crime rates, low unemployment rates, and low housing costs are drawing many people to the area. During 2019, Fall Creek Homes saw a tremendous increase in inquiries and buyers coming from out-of-staterâs; mostly from Colorado, Utah, California, and Washington State. This influx of interest from out of state buyers has placed an additional demand for homes in a market where inventory levels have been quite low, which has lead to higher prices, which leads to the next prediction:
(3) Rising prices. With a low inventory of existing homes and most new home builders building at capacity, high demand for homes will place upward pressure on local real estate prices. The old adage of âyou canât buy that which doesnât existâ is certainly true, and for many would-be home buyers, there just isnât much to choose from in our current market. Tight supply is unlikely to improve much, as many who would like to sell their existing home hesitate to list them out of fear that they might sell quickly and they wonât be able to find an acceptable replacement. What about building/buying new? While it seems like everywhere you turn here locally thereâs a new subdivision going in, the reality is that most new residential construction companies are building homes at capacity. Limited subcontractors, available truss sheds, etc. all prevent Builderâs from simply increasing the number of new homes that they are able to build. Some builders are only building spec homes rather than pre-solds because they are faster and easier to build, and are frequently under contract by the time the home is framed. Builders who are willing to build from the ground up for a customer are often times booked out months into the future. Trade embargoes and tariffs (with places such as China) have also served to put upward pressure on new home prices, as many components of a new home are at least in part manufactured overseas. All of this serves to put an upward pressure on pricing, which ultimately is passed on to the end buyer.
In short, my forecast for the local 2020 residential real estate market can be summed up as âsecond verse, same as firstâ meaning 2020 is likely to look very much like what weâve seen during 2019.
Bruce Jolley
MBA, REALTORÂź | Fall Creek Homes
980-B Pier View Dr | Idaho Falls, ID 83402
