2020 Vision of the Market
Forecasting the future can be hard, but starting with a good knowledge of the past can give a clearer vision of the future. The real estate market in Jackson County has been very stable for years so it’s logical to assume the trend will continue in 2020. Based on the numbers below, it’s safe to assume that around 4,000 homes will sell in 2020 and prices will continue to rise.
Although the number of homes sold per year has stayed about the same in the past few years, the price of these homes has been increasing each year for an average of about $14,000 per house, per year. We have had very little inventory on price points below $400,000 so that has helped prices to rise. As far as price points, we have seen a decline in home sales under $300,000 since 2016. This isn’t due to the lack of demand, but lack of supply. The most active price point was $300,000 – $350,000 which saw the most home sales. The number of homes sold from $300,000 – $999,000 has steadily increased in sales each year but the number of homes sold over $1,000,000 has been stagnant. It is a weak market for homes priced over $1 million with very few selling.
If you just looked at the housing market for the past few years, you would forecast for 2020 that about 4,000+ homes will sell and the median price of a home will go up about $14,000 and increase to a median price of $306,500 by the end of year. However, in addition to using the past to predict the future, you need to also look at the factors that are creating demand for housing and the factors that may slow down, or speed up the market.
On the positive side:
- Jackson County’s unemployment rate is down to a low of 5.3%, so more people are making money. Yes, we’re behind the national average, but these are great numbers for our area.
- Interest rates are at a classic low with a 30-year mortgage averaging 3.8%, which means buyers can get more house for the same monthly payment.
- Southern Oregon continues to increased its tourism draw and revenue, with 2019 turning out to be a good year. This is an important part of our economy and it introduces potential buyers to the area.
- Southern Oregon has increased its draw for retirees, making them an important part of our economy. The number of Americans retiring daily has nearly doubled since 2000 and currently, roughly 10,000 people turn 65 each day, the standard age for retirement.
- New construction in our area has increased, giving buyers more options.
- The stock market is at an all-time high and made huge gains in 2019. High stock market prices also equate to a higher 401K retirement value, causing people to feel good about retiring earlier. High stock prices also mean there are very few good deals for investors, so we start seeing an increasing number of investors turning to real estate investments.
- The hemp market, while having some weather challenges in 2019, has added a sizable boost to our local economy, and the demand is forecasted to continue in 2020.
- We have seen an influx of refugees moving here as a result of California fires, especially the Camp fire in Paradise. Rampant wildfires, sky rocketing fire insurance costs, and the precautionary blackouts are reshaping life in California leaving many residents to question whether they should leave and move north.
- We had a beautiful summer, free of smoke and with moderate temperatures, but we need to get the word out. There is still a “Fear of Smoke” for many that live outside the state. The lack of smoke didn’t seem to have much effect on our summer sales this year but we’re starting to feel an increase in buyers coming back this winter to rethink moving here.
On the negative side:
- Many economists are predicting a recession in 2020 due to slowing growth of the global economy.
- Global Sales are declining and large US companies are feeling it.
- Our national debt is increasing at a record pace. With a major tax cut and increased spending bill we are experiencing a record deficit.
- Homeowners are staying in their houses longer. The average is now 13 years which is 5 years longer than 2010.
- Consumer debt is at an all-time high so fewer families can afford a mortgage or a larger mortgage. Consumer debt has climbed to $4 Trillion not counting mortgages.
- The Federal Reserve has taken actions to stimulate the economy, which is concerning, as usually these measures are reserved as tactics to get the US out of a recession.
- We had 2 summers filled with smoke. We saw some families move out of the area and many retirees chose not to retire here. There still may be a “Fear of Smoke” that keeps retirees and escapees from relocating here.
How these positive and negative factors affect our housing market has yet to play out. My bet is that the economists are correct and the US economy will slow in 2020, but that will have little effect on our area. With the increasing amount of fire related issues in California, combined with the large number of Americans retiring, my forecast for 2020 is that our area will see an increase in the number of homes sold and an increase in the median price of a home. If we see a second smokeless summer, we will overcome the “fear of smoke”, attracting escapees and retirees and stimulating the market for higher end homes which will be a double-digit growth in the 2020 Real Estate market.