This week on “Mondays with Matthew”: Now that things have settled down somewhat following the initial impact of COVID-19, Matthew dives into the topic of mortgage rates. Will they go below 3%? Matthew discusses this and the factors that have formed his updated 2020 and 2021 mortgage rate forecast.
This week we hosted our clients and friends for a special online event with our Chief Economist Matthew Gardner.
Matthew talked about a variety of topics that are on people’s mind right now including home values.
Matthew sees no evidence that home values will crash and actually sees signs that they may rise this year nationally.
Here’s why he says this:
- Mortgage rates will remain under 3.5% for the rest of the year so there won’t be any interest-rate pressure on prices
- Inventory, which was already at record-lows, will drop even further keeping the supply levels far below normal
- New home construction will continue to be under-supplied and will be nothing like the over-supplied glut of inventory that we saw in 2008
- The vast majority of employees being laid off and furloughed are renters
- Homeowners have a tremendous amount of equity in their homes right now compared to 2008 which will prevent an influx of short sales and foreclosures
If you would like to receive a recording of the webinar we would be happy to send it to you. Feel free to reach out and ask for the link.
On Wednesday April 22nd you are invited to a special online event with Windermere’s Chief Economist Matthew Gardner.
He will be giving his insights into the U.S. economy and what that means for real estate along the Front Range of Colorado.
You will hear the answers to the biggest questions we are hearing from clients now like “do you think housing prices will crash?”
This event is exclusively for clients and friends of Windermere Real Estate. To receive the registration link simply comment on this blog or reach out to your Windermere real estate broker.
Many of you have heard Matthew speak at our Market Forecast events we hold each year in January. He is famous for making complex economic dynamics very simple to understand.
You will get useful and valuable information which will give you clarity about where the market is headed and when we can expect the economy to improve.
For example Matthew predicts unemployment to hit 15% by the end of June, but then to improve to 8% by year-end and 6% by this time next year.
Again, if you would like the link just comment on this blog or reach out to your Windermere broker.
Here is our interest rate Forecast for the next year.
Our Chief Economist, Matthew Gardner, predicts that rates for a 30-year fixed mortgage will stay between 3.8% and 3.9% for 2020.
He doesn’t see rates going above 4.0% until at least the first quarter of 2021.
This is obviously great news for buyers as their payments will stay much lower as compared to having a rate at the long-term average of 7.5%.
If you would like to see the slides from Matthew Gardner’s Forecast presentation, we would be happy to get those in your hands. Just let us know if we can help!
Windermere Chief Economist, Matthew Gardner, answers the most pressing question on everyone’s minds: Will there be a recession in 2020? Here’s what he expects to see.
Millennials often get a bad rap. One of the myths about Millennials is that they don’t own homes and will be renters forever.
Not true! Especially on the Front Range of Colorado.
Based on research by our very own Chief Economist, Matthew Gardner, Millennials make up a significant percentage of all home buyers in Metro Denver and Colorado.
In Metro Denver, 50% of all buyers last year were in the Millennial demographic.
In Northern Colorado, the number is 41%.
It turns out that Millennials, as they move into their mid to late 30’s, see the value of home ownership and are at the point in their lives where it makes sense to own instead of rent.
A quick, simple Fun Fact for you this week…
It’s time to sign up and register for our annual Market Forecast event.
We will be live in Denver on January 15th at the Wellshire Events Center.
And In Fort Collins on January 16th at the Marriott.
Both events start at 5:30. Choose which location works best for you.
Matthew Gardner, our Chief Economist, is the Keynote speaker.
Click the links above to RSVP.
It’s time to register for our annual Market Forecast event. We will be live at 5:30 on January 16th at the Marriott in Fort Collins. Back by popular demand is our Chief Economist Matthew Gardner. Save your seat HERE.
As we head toward the end of the year, it’s time to recap how the U.S. economy and housing markets performed this year and offer my predictions for 2020.
In general, the economy performed pretty much as I expected this year: job growth slowed but the unemployment rate still hovers around levels not seen since the late 1960s.
Following the significant drop in corporate tax rates in January 2018, economic growth experience a big jump. However, we haven’t been able to continue those gains and I doubt we’ll return to 2%+ growth next year. Due to this slowing, I expect GDP to come in at only +1.4% next year. Non-residential fixed investment has started to wane as companies try to anticipate where economic policy will move next year. Furthermore, many businesses remain concerned over ongoing trade issues with China.
In 2020, I expect payrolls to continue growing, but the rate of growth will slow as the country adds fewer than 1.7 million new jobs. Due to this hiring slow down, the unemployment rate will start to rise, but still end the year at a very respectable 4.1%.
Many economists, including me, spent much of 2019 worried about the specter of a looming recession in 2020. Thankfully, such fears have started to wane (at least for now).
Despite some concerning signs, the likelihood that we will enter a recession in 2020 has dropped to about 26%. If we manage to stave off a recession in 2020, the possibility of a slowdown in 2021 is around 74%. That said, I fully expect that any drop in growth will be mild and will not negatively affect the U.S. housing market.
As I write this article, full-year data has yet to be released. However, I feel confident that 2019 will end with a slight rise in home sales. For 2020, I expect sales to rise around 2.9% to just over 5.5 million units.
Home prices next year will continue to rise as mortgage rates remain very competitive. Look for prices to increase 3.8% in 2020 as demand continues to exceed supply and more first-time buyers enter the market.
In the year ahead, I expect the share of first-time buyers to grow, making them a very significant component of the housing market.
The new-home market has been pretty disappointing for most of the year due to significant obstacles preventing builders from building. Land prices, labor and material costs, and regulatory fees make it very hard for builders to produce affordable housing. As a result, many are still focused on the luxury market where there are profits to be made, despite high demand from entry-level buyers.
Builders are aware of this and are doing their best to deliver more affordable product. As such, I believe single-family housing starts will rise next year to 942,000 units—an increase of 6.8% over 2019 and the highest number since 2007.
As the market starts to deliver more units, sales will rise just over 5%, but the increase in sales will be due to lower priced housing. Accordingly, new home prices are set to rise just 2.5% next year.
Next year will still be very positive from a home-financing perspective, with the average rate for a 30-year conventional, fixed-rate mortgage averaging under 4%. That said, if there are significant improvements in trade issues with China, this forecast may change, but not significantly.
In this coming year, affordability issues will persist in many markets around the country, such as San Francisco; Los Angeles; San Jose; Seattle; and Bend, Oregon. The market will also continue to favor home sellers, but we will start to move more toward balance, resulting in another positive year overall for U.S. housing.
About Matthew Gardner:
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Geopolitical uncertainty is causing mortgage rates to drop. Windermere Chief Economist, Matthew Gardner, explains why this is and what you can expect to see mortgage rates do in the coming year.
Over the past few months we’ve seen a fairly significant drop in mortgage rates that has been essentially driven by geopolitical uncertainty – mainly caused by the trade war with China and ongoing discussions over tariffs with Mexico.
Now, mortgage rates are based on yields on 10-Year treasuries, and the interest rate on bonds tends to drop during times of economic uncertainty. When this occurs, mortgage rates also drop.
My current forecast model predicts that average 30-year mortgage rates will end 2019 at around 4.4%, and by the end of 2020 I expect to see the average 30-year rate just modestly higher at 4.6%.