2020 Rental Market Forecast

2019 was a good year for the housing market. Home values shot up, the economy was strong, and mortgage rates dipped down. It was a good year for the housing market and the people who were buying and selling in it. But as we begin the start of a new month, a new year, and a new decade all at once, investors, buyers, and sellers are curious about what is to come in 2020.

Here’s what industry experts are saying about the 2020 housing market:

Slowly Rising Home Values

Home prices rose slowly in 2018 and slowed down even more in 2019. Experts predict 2020 will follow the same pattern. Seller’s can expect home prices to increase by just 2.8%, which means sellers will see a profit, but buyers and investors won’t be blown away by outrageous price increases. When home prices creep up, even slowly, it means more families can not afford to buy property, which means they have to continue renting. This is good for landlords because it reduces vacancies and keeps occupancy rates high.

Since rent prices are usually determined on home values, the more a property is worth, the higher you can set the rent.

Declining Interest Rates On Mortgages

Similar to home values, 2019 was a year of slowly declining interest rates on mortgages. Interest rates on many major loan types dropped under 4%. The prediction is that buyers and investors that take out a 30-year mortgage will see interest rates at around 3.7% and 3.2% on 15-year mortgages. The thing about interest rates is that there is never a guarantee. There are so many economic factors that go into how interest rates are determined, that it can be hard to say exactly what interest rates will do in 2020.

What we do know is that when interest rates are low, buyers are more motivated to make the jump to purchase property vs. wait it out. For sellers, higher interest rates may mean their house is on the market longer because buyers and sellers are waiting to see if interest rates will drop again. Being in an election year adds another variable making it hard for an accurate 2020 rental market forecast.

Average Rental Price Increases

This is the news investors have been waiting for. The average monthly rent in San Diego in 2019 was $1,852, which is 2.7% higher than it was in 2018.Economists are predicting initial rental rates set at 2.7%- 3.6% more than last year, and don’t anticipate a decrease in rental prices in the next four years.

California’s new rent control laws will also impact rent prices. The new legislation limits rent increases to 5% per year but only applies to rentals that over 15 years old.

2020 Will Be A Good Year To Invest In Rental Properties

While California is home to waterfront mansions, celebrities, and multi-million dollar neighborhoods, it also has a severe homelessness and poverty problem. Many first time home buyers struggle to afford their first home, so they continue to rent. While this may not be ideal for renters, it means there is always a demand for rental properties in the California area, especially in areas like Murrieta and Temecula. Experts remain confident that 2020 will stay secure for landlords and investors.

The Bottom Line

As 2019 came to a close, there were already signs that the housing market was inching towards a structural transformation. While the US housing market has consistently favored the sellers in the last few years, experts say 2020 will be a year for the buyers. A slow down in appreciation, a dramatic surge in real estate development and construction, and low mortgage interest rates all point to 2020 shifting towards a buyer’s market. This balance is good news for investors, especially first-time investors, who want to jump into the real estate investment process but want to avoid a costly and time-consuming bidding war. A 2020 rental market forecast is just that, a forecast. Knowing the characteristics of a good investment property is equally important.

Benefit National Is Your 2020 Property Management Company

If you’ve been thinking about investing in property, 2020 is your year. There are signs of a buyers market on the horizon, which means now is a great time to find the perfect property in Murrietta or Temecula. Maximize your profits and reduce vacancies by hiring a Temecula property management company to take care of your investment in 2020.