It’s been a crazy time in real estate! No one can argue that.
Despite the economic pain of the pandemic, we have near-record low housing inventory, continuing low interest rates, a wild sellers’ market, and Covid-related protections for homeowners. It all feels a little nuts!
Are we in a housing bubble and expecting a repeat of the housing crash of 14 years ago?
A housing crash? I don’t think so…based on my research and input from many experts. While no one can say for sure what will happen in the real estate sector, most experts think we will experience a market dip, but not a crash.
Low housing inventory is a major culprit in what has become a battlefield of competitive buying. Many pandemic-affected buyers can work from anywhere and are now determined to get WHAT they want WHERE they want it while interest rates are low.
Many of these people are millennials who are now buying homes and starting families. And there are lots of them—72 million!
Homeowners who avoided putting their homes on the market during the height of the pandemic are beginning to feel more comfortable selling now and are encouraged by appealing sales figures.
New home construction took a big hit in 2020 and will take time to reach the level of housing demand. Builders are active throughout the country. Although new housing will ultimately level off, recent market trends suggest that won’t happen anytime soon.
Interest rates. It appears the Federal Reserve will keep interest rates low for a while, maybe beyond 2022. Naturally, home buying will continue as rates remain low.
Home prices. As of April 2021, the nation’s current median home price for all housing types is now around $375,000, up about 17% from the prior year. Economists at Fannie Mae, Freddie Mac, the Mortgage Bankers Association, and the National Association of Realtors forecast median prices will rise between 3 to 8% in 2021, a significant drop from 2020 but nothing like the price drop seen in the last housing crash.
Pandemic Mortgage Forbearance has helped millions of mortgage holders avoid foreclosure by postponing their monthly mortgage payments without penalty. As of March this year, 2.6 million homeowners’ mortgages were in forbearance. Yet with the ongoing economic recovery, many people have returned to work and resumed their home payments. Expectations are there may be 200,000 foreclosures when all is said and done, but that’s far below the 6 million following the 2007 crash.
So, what does all this mean and what’s ahead? Hard to say for sure, yet looks like more opportunity ahead.
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