On Thursday, January 9, CAR members gathered at the Swissotel Chicago to hear from three leading real estate economists on what they can expect from 2020. Dr. Lawrence Yun of the National Association of REALTORS®, George Ratiu of realtor.com® and Brandon Svec of The CoStar Group, spent the afternoon providing their insights into the residential and commercial real estate market not only in Chicago but also throughout the U.S. and globally.
What can you expect from 2020? We gathered five takeaways from the event so you can get a jumpstart to the year.
Number 1: The market will see steady, although not robust, growth.
All three economists agreed that the real estate market would see steady growth through 2020, although all three also said not to expect significant growth. A variety of factors, including demographic shifts, mortgage rates, state taxes, trade war possibilities and more, all play a role in what we are seeing in terms of growth.
Number 2: Expect to continue to see less inventory.
As we have seen in previous years, we can still expect to see a decline in inventory in the city. A big factor in this is development not meeting demand. Many people and families currently looking for homes are looking in the low to mid-price range, where inventory constraints are being greatly felt.
Number 3: The key to growth in 2020 will be affordability.
There has been a growing demand for low to mid-range housing in Chicago, with very little inventory to show in that part of the market. Although demographics are driving housing, Chicago’s inventory is not meeting the demand of the younger generations. Inventory is also tight in move-up segments of the market, which is further restricting entry-level housing. One in four first time homebuyers spend over a year looking for a home – and are squeezed on pricing.
Number 4: Millennials are leading the housing market.
Demographics are driving the housing market, which bodes well for the population in the U.S., where 60% of the population is under the age of 60. Millennials are currently number one in the share of primary home mortgages, and, on average, they tend to take on higher mortgages than baby boomers.
Number 5: Anticipate a pullback on construction throughout the city in most areas.
Housing construction throughout the city will see a decline for the second year in a row, although this doesn’t mean all areas in Chicago are seeing this. Areas with a population that is predominantly young and highly educated, such as Fulton Market, are still seeing heavy action in construction.
Check out the 2020 Market Outlook Presentations:
- Dr. Lawrence Yun | Chief Economist & Senior Vice President of Research, National Association of REALTORS®
- George Ratiu | Senior Economist, realtor.com®
- Brandon Svec | Market Economist, CoStar Group
- Economist Panel Discussion moderated by Rebecca Thomson | Regional Vice President, Coldwell Banker Residential
Thank you to our program sponsor, Cross Country Mortgage!