Prediction: Strong housing market in 2020
I found this article to be interesting regarding the housing market - nationwide. As most of you know, South Dakota, because of its large agriculture base, is typically cushioned from the highs and lows that other regions experience each year. However, here are my main takeaways as it applies to us living in the Midwest.
1. Nationally, home sales dropped in December
Nationally, new home sales dropped in December of 2019, but in the Midwest, new home sales increased by 10%. Even though this article talks only about new home sales, sales of older homes also remain strong due to supply and demand. I was at a seminar a few months ago and they talked about the housing supply shortage within the Sioux Falls market. Because supply is low for new homes, homeowners that want to upgrade are deciding to stay in their homes and do remodel projects. Construction loans for remodels and additions are in high demand.
2. Confidence among builders is strong
When the recession of 2008 hit, South Dakota was cushioned somewhat from the major dive in the economy. However, new homes were not being built because no one knew what was going to happen next and private industry growth came to a screeching halt. If you were employed by an architecture firm in 2008, it was a scary time. A lot of professionals were laid off and companies did what they had to do to stay alive. With 2008 in our rear-view mirror, we can look ahead and see a strong housing market in 2020. Contractors are confident that if they build a home it will sell. With supply of homes being low, demand always increases.
3. What does this mean for current homeowners?
If you currently own a home, the strong housing market is good news for your homes' value. Even if you are not thinking of moving to a different home, knowing that the housing market is strong does great things to the value of your current home. This goes back to my opening statements regarding home remodels. Because supply for new homes is low, demand increases. People that own a home and want to move/upgrade, are finding it difficult to find what they are looking for. I have worked with numerous clients that like the neighborhood they live in but their home doesn't work for them anymore. In 2020, more homeowners are going to decide to stay in their current home and start that addition or remodel project they have been putting off for years.