A new report from Redfin suggest that the U.S. housing market is off to a strong start in 2020, as a deepening shortage of homes for sale and surging home-buyer demand are set to push prices up at the fastest rate in years.
Home-buying demand appears to be spiking in January as many potential home buyers are turning into active home buyers well in advance of the typical spring peak home-buying season.
“With every new release of data this year, I’m becoming more and more confident that demand will be strong in 2020 – just as strong as, if not stronger than, in 2018 and 2017,” says Redfin Chief Economist Daryl Fairweather.
“The big question for the housing market this year is supply. Will homeowners sit on the sidelines, content with their refinanced loans, or will they want to get in on the action too and move up, move down, or cash out entirely? New construction is beginning to pick up in some markets though, so even without new listings of existing homes, there will be some relief for homebuyers hoping for more selection. However, due to the high cost of acquiring and developing land in expensive coastal cities, much of that new construction will be built far away from urban centers or in already affordable metros,” he adds.
Unless a lot of new housing inventory hits the market soon, the 10-year peak in home-buying demand, coupled with a 20-year low in the numbers of homes for sale, will lead the housing market into a significant inventory crunch. That could result in a sudden and rapid rise in bidding wars and spiking home prices.
“It is busier than I expected this year,” says Redfin Boston listing agent Delince Louis. “My first listing of the new year has already received four offers. Low interest rates and low inventory are fueling activity, and we are seeing activity now that we normally wouldn’t see until March.”
To read the full report, click here.