Local Records Office in Bellflower, California has created a report that details that the United States federal government has significantly dropped interest rates. This is basically in an attempt to revitalize the economy and prevent a possible housing market crash by 2021. As such, a wave of mortgage refinancing is highly anticipated.
With the housing market showing glimpses of bouncing back from the recent economic stalemate, it remains unknown how much longer it will persist in the heart-breaking recession, along with the prevalence of the coronavirus pandemic.
According to the Local Records Office, economists and real estate pundits predict that, as house prices have been slashed and flattened, homebuyers and real estate investors are to brace themselves because the balance could remain through the final quarter of 2020, with a predicted 1.1% increase.
Local Records Office questions how the last quarter of 2020 will be for homebuyers
As states strive to carry on with normal life in the latter stages of 2020, uncertainties just keep growing, with jobs recovering at a slow pace, and mortgage rates trending at record lows. If you are qualified for a mortgage, there is a high possibility for you to face lower prices and limited selections compared to the post coronavirus era. But on the bright side, there is bound to be minimal market competition.
The coronavirus emergency response scheme has made it possible for most borrowers facing financial hardships to receive forbearance. Being a reduction or pause in mortgage monthly payments, they can now request for an added six months, as the US Federal Housing Administration (FHA) does not require lump sum repayments at the close of the forbearance.
Local Records Office suggests that the recent announcement concerning the payment deferral option for borrowers is huge. As the (FHFA) Federal Housing Finance Agency announced, some enterprises are working on a new payment deferral option. This option allows borrowers who can continue with normal monthly mortgage payments to make up for missed payment when the house gets sold or refinanced.
Before the Covid-19 outbreak, the top markets that favored homebuyers were Minneapolis, San Francisco, Tampa, Rochester, and Pittsburgh. And based on an analysis by Realtor.com, these markets were rapidly cooling off every year with up to 26% monthly supply of homes.
All in all, the last quarter of 2020 is seemingly on an already outlined positive direction. With mortgage rates trending at record lows and jobs recovering at a slow but assuring pace, and the housing market crash becomes far-fetched.
How Will the Home Market Be for Homeowners in 2021?
From the first quarter of 2021, homes are expected to be slow to sell according to the Local Records Office. This means homeowners may have to wait for predicted fruitful months ahead to see if the market will drift from a buyers’ market to a balanced one before striking home sale deals. Moreover, ‘affordable homes’ are an exception and sadly in short supply.
In March 2020, Colorado Springs retained the prize for the hottest housing market in the United States for the second consecutive month according to Realtor.com. Half the listed homes in Colorado had buyers in just under 28 days with a 9 days cushion to last year and a staggering 33 days faster than the rest of the country. Real estate properties in this metropolis also garnered 2.5 times as many home listings views than the median property around the US.
Also, Salt Lake City, Phoenix, Riverside, Baltimore, and San Diego have markets that favor sellers. And with these markets rapidly heating up yearly, with monthly home supply taking a nosedive down by 52%year over year.
In the report by the Local Records Office the home prices facing a massive blow and the homeowners who are readily willing to sell on a decline, it is fair enough to consider it a downside to the real estate industry in general amidst the prevalence of the coronavirus. But looking at the bright side and being realistic, a housing market crash is neither a short run eventuality in the latter quarter of 2020 nor the long run in 2021.
Local Records Office wonders how 2021 will be for investors
Research by the Local Records Office suggests that most investors are now doing business while bearing in mind the possibilities of a housing market crash in 2020/2021. As such, those who have primarily acquired property at courthouse foreclosure auctions are considering the option of buying bank-owned real estate (REO). Consequently, there is fierce competition for these homes by buyers due to the fear of the moratorium on foreclosures which could trigger a price increase in the uncertain housing market.
Meanwhile, for some investors alike, they have the fear of buying homes and flipping them immediately. This is due to the uncertainties regarding real estate prices and the market in general. Given that rental properties do not pose many risks, some investors are willing to buy rental homes and hold onto them for the foreseeable future.
Most recently, a survey by Auction.com revealed that about 64% of investors who buy rental investment properties choose to acquire more amidst the prevalence of the coronavirus pandemic and other devastating events. This alone is evidence of unsure housing market days by 2021.
A prediction by Zillow says the housing market could face a recession and crash by 2021. Although the housing market will most likely not be the cause of the next recession, and economic decline as a result of other factors will still have a massive impact on the United States’ real estate industry. And the US housing market could have a nosedive fall into a recession in just under 5 years.
Local Records Office thinks the housing market’s situation depends on the severity and length of the 2020 recession. And if the effects are worse in some parts of the country than others, most local housing markets would be significantly hit.
Among those who have openly predicted home market situations by 2020/2021, is Scott Anderson, chief economist at Bank of the West who said “The current economic expansion is getting long in the tooth by historical standards, and more late-cycle signs are emerging,”. In his quote, he signals a cause for concern regarding housing markets.
Local Records Office questions a survey by the Wall Street Journal has revealed that a staggering 59% of private economists claim that the economic expansion that started in 2009 was likely to end in 2020, 22% predicted 2021, and other smaller groups predicted 2022 or at an unknown later date.
Based on research by Zillow, 100 economists and real estate experts were surveyed on the housing market predictions. About 55% of them predicted a recession starting in the last quarter of 2020 into 2021.
What Is the Housing Market Bottom Line?
The US housing market is most likely poised to crash by 2021 with heart-breaking effects underway. Yet with all factors considered, investing in real estate is still a wise move since now is an ideal time to acquire investment properties.
Today, home price appreciation rates are slowing, while prices just keep rising. And in the meantime, some economists predict a continuous rise in home prices, with much dependence on the federal government’s ability to revitalize the economy and bounce back from the effects of the coronavirus pandemic.