Decoding the Housing Markets: A Comparison Between 2019 and 2020

Without a doubt, 2020 has been a year of unpredictability, with the housing market being no exception. Back in March 2019, the Federal Reserve hinted at slight rate hikes, if any, within the next couple of years. This was music to the ears of prospective homebuyers, who saw an opportunity to secure a mortgage at a low rate, not anticipating the pandemic and the subsequent historic rate cuts 2020 would bring.

Around the same time last year, we posted a blog discussing the most attractive housing markets in the U.S. With a combination of low unemployment rates and falling mortgage rates, buying power grew across various demographics, particularly among millennials. Since then, interest rates have plunged to unprecedented lows, and unemployment has soared, hitting a peak of 14.7% in April 2020, compared to 3.6% in April 2019.

Industry experts have since speculated on the future of the housing market, some expecting the worst. Despite this, after a brief slowdown, sales have only fallen by 11.3% from 2019, and home values were up by 5.1% in August compared to the previous year. This is to say that the housing market is still thriving, even in the face of an ongoing pandemic and the highest unemployment rates we've witnessed in decades. However, has this affected the attractiveness of the same markets to buyers? Has urban living become unfeasible or unsafe due to COVID-19? Let's dissect this.

Top Markets in 2019

Major cities like New York City, Los Angeles, and Seattle have transformed into "luxury cities" in recent years, with soaring taxes, rent, and housing prices pushing current residents to explore living options elsewhere. A recent Zillow report suggests that suburban housing markets have not grown disproportionately faster than urban markets in 2020. Nevertheless, they note that suburbs with consistent sales, despite a more limited supply, might indicate hotter market conditions.

Based on factors such as population, time on the market, and median listing price, these five cities topped our list last year:

1. Grand Rapids, Michigan: A serene city with abundant parks and vibrant nightlife. Millennial buyers accounted for 48% of new purchase mortgages.
2. Omaha, Nebraska: Known for its top-rated school districts and low cost of living. Millennial buyers represented 43% of new purchase mortgages.
3. Boise, Idaho: Boasting Boise State University, plentiful amenities, and an average home value 14% above the national average. Millennial buyers made up 28% of new purchase mortgages.
4. Shawnee, Kansas: A small city celebrated for its walkable downtown and low cost of living. Millennial buyers accounted for 43% of new purchase mortgages.
5. Rochester, New York: A city packed with cultural diversity, job opportunities, and exciting amenities. Millennial buyers made up 43% of new purchase mortgages.

Emerging Markets in 2020

Given the late stages of reopening in most cities and reclosures in others due to spiking COVID-19 cases, it remains unclear whether buyers prioritize location over availability and affordability in this economic climate. However, the following markets are currently trending upwards:

According to AreaVibes, a website that considers various factors such as education, employment, crime, cost of living, and amenities, Ohio appears to be the most attractive. Three of their top five cities, based on livability scores, are just outside Columbus, Ohio.

Meanwhile, a recent study by Realtor.com pointed out that cities like Colorado Springs, CO; Reynoldsburg, OH; and Rochester, NY, are "hot" in 2020, based on factors like time on the market and buyer interest.

Regardless of where you decide to relocate, it's crucial to have a reliable home buying team on your side. This includes partnering with a lender, such as Crosscountry Mortgage, to determine how much you can afford, and a real estate agent to find the perfect home for you.

Ready to capitalize on historically low rates? Let's get started! Reach out to us today to learn more!

This article is for educational purposes only and does not constitute financial or mortgage advice. Loan programs, rates, and guidelines may change at any time. All loans are subject to credit approval and underwriting. For guidance tailored to your situation, consult a licensed mortgage professional.