The new decade is in full force and the industry has already experienced new shifts and sees emerging new trends. What do the mortgage and real estate markets have in store for 2020? First, let’s talk about what changes have already made their way into motion. Then, let’s dive into the trends that are expected and taking shape for the year.

Loan Limits
The new conforming loan limits announcement made back in late November was one of the hottest topics closing out the 2019 year. This was a huge shift with both higher and lower cost areas seeing almost a 5.5 percent increase. The FHA and VA loans also saw limits rise. These new maximums make it the highest level the feds have ever reached. The industry is hoping to see more buyers enter the market, as they’ll have more purchase option and affordability, even with the high pricing index. Sellers are expected to list their homes at a higher mark and be more confident they’ll have more buyer prospects.

New Policies, Laws, Regulations
This past year, State Legislatures began passing rent regulations nationally, specifically in New York, California, and Oregon. The new laws took effect on day one of this year. Generally, this law will create a cap on the amount a landlord can increase rent prices. It will limit the reasons for eviction and will protect tenants to a certain number of “just cause” requirements for acceptable removal of a tenant.

In California, for example, the law limits the annual increase to being more than the cost of living (Consumer Price Index) plus 5 percent or up to a maximum of 10 percent to the previous rent; whichever is less. It is also a statewide law covering areas that don’t have existing rent control protections.

The laws will apply depending on the type of property, how old the building is, and the type of owner (single person vs. business/company). Each law is different per state, even down to specific communities. They can be very in-depth, so it is important to be in the know for any changes if you currently rent or own a rental property.

With such big markets making these rent control regulations, it is imagined that other states will follow suit this year.

Economic and Global Shifts
The real estate sector is heavily influenced by economic changes and adapts to the ever-evolving patterns and behaviors. Due to challenges like increased home pricing, supply shortage, and slow wage growth, new living accommodations have emerged: more family members are moving back in together, couples have ventured into co-living with other couples, senior citizens have occupied ‘granny flats.’ Trends like these along with the growing global population will take effect on the housing market.

Research within this decade by the Census Bureau revealed that by 2050, people aged 65 years and older will be more than double those aged 15 and younger for the first time, globally. How does this affect real estate? There will be more demand for affordable housing and the appropriate types of housing necessary. Different and new developments in residential properties will be added to match the needs of consumers. Housing prices are expected to deflate and new real estate sectors and investment opportunities will be created. And we could begin to see even more of these changes continue this year.

Eco-Real Estate
Now that we’ve hit the new decade, sustainability is a common necessity than just an option. New developments, buildings, and properties have already established a “green,” eco-friendly mindset. Waste reduction, clean and renewable energy, self-sufficient smart devices, and cost-efficient features can all help reduce the cost of living for renters and homeowners.

California headed the trend by making it an official requirement, starting this year, that all new houses have solar power. The new state law, not only requires efficient energy for homes but an expanded goal that at least 50 percent of California’s electricity must come from non-carbon-producing sources in this decade, by 2030.

Since the initial announcement back in 2018, multiple states have joined the bandwagon. States like New Jersey, Massachusetts, and even Washington D.C., are considering a law to make clean energy a mainstream mandate.

Homes can also be LEED-Certified to qualify as ‘eco-friendly.’ This is when a home or building consciously makes the effort to reduce water and energy use – all the way down to materials used to build it. The USGBC stated that there were 296 buildings and homes, nationally in 2006 that held this certificate. As of 2017, there are more than 65,000 LEED-Certified homes and buildings. This number shows a significant factor in the global mindset of smart living

Homeowners may see an extra cost upfront for these green elements but will be saving tons in the long run on utility and energy bills. The best news is that every little bit counts. Starting now, big or small, will help later on. With a high-cost investment, comes a greater reward. Not just for our wallets but the proper sustainability of our planet. We’re all about this!

Digitization, AI and Technology
It is expected that technology adaptation will heavily advance this year. More and more companies and areas within the industry are embracing the changes in user behaviors and using technology to their advantage. New technology for going paperless, messaging bots and artificial intelligence, new video tech and the rise of the iBuyer is one of the hottest discussion points for 2020.

More consumers have found convenience in searching for and listing homes using a smartphone or the Internet in general. Industry stats have already seen a growth in numbers and more data has become available for real estate action happening on smartphones. Based on data collecting, results from NAR found that 50 percent of homeowners found the home they purchased on the Internet, and only 28 percent used an agent. Sites like Zillow have become a go-to with almost 200 million visitors each month! Buyers find the homes they are interested in by using the user-friendly, wide search tools from the comfort and convenience of their own time. Then, they reach out to an agent to help see the property in person – if necessary.

The NAR also found that 93 percent of agents prefer email communication, 92 percent prefer text messaging, while 37 percent prefer to use instant messaging. Clients and agents seem to favor text messaging to fit their bustling lifestyles and for quick and direct contact. A study done by Ellie Mae (a data collecting agency) found that there are certain boundaries to consider. Over 500 home buying consumers were surveyed and 19-26 percent said well wishes, like a happy birthday text, or a quick check-in was ok. Only 29 percent said it’d be appropriate to send promotions or programs through text, with the bigger half finding it inappropriate. For agents, things such as compliance, professionalism, accessible resources, and the use of personal phones, all play a role in deciding whether text messaging is the best form to communicate or not.

Agents and companies have now been transitioning over to paperless transactions more than ever before. Technology and tools that can integrate with other industry programs and systems have been a significant requirement to keep up and create an evolving business. Agents found that MLS website and apps were one of the most valuable tools for them at 64 percent, followed by lockbox or smart key devices for home showings if the agent cannot be present at 39 percent, and then social media at 28 percent to stay in front of clients and build a wider network overall. The latter also bringing in the most leads at almost 50 percent followed by MLS sites at 32 percent. A truth-telling that consumers are on their mobile phones more than any other device.

Other technology that continues to develop the market includes virtual reality tours, voice-activated tools, and direct investment outlets that create more opportunities for expansion and growth.

The popularity of the iBuyer has directly effected how the process of buying a home operates. From online searches to email, and paperless transactions, the tedious task work for the middleman has lessened and more time can be spent on the client’s direct needs.

In conclusion, 2020 has anticipated a lot of shifts for the industry. My team is constantly on the lookout for ways to make your real estate and mortgage need the most optimal. We would love to hear your thoughts on any of these topics. Give the office a call today!

This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was written by Sparkling Marketing, Inc. with information from resources like RISMedia, NAR, and Realtor Magazine.