The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only while the REO eviction moratorium applies to properties that are acquired by Fannie or Freddie through foreclosure or deed-in-lieu of foreclosure transactions. Home prices in most markets around the country are high, even though we are in a recession. For those that currently own real estate and haven’t refinanced, there’s still a good opportunity to do so in 2021 at today’s very low rates. However, all of the predictions made by real estate agents in the year 2019 for 2021 proved to be wrong because of the pandemic. It's an indication that housing continues to lead the economy forward. A good indicator of a housing market crash is a rise in the ratio of house price to average earnings. Millions of Americans have shifted to working from home since COVID-19 shut down their offices. At the same time, the stimulus package that Congress passed in March was more than double the financial aid offered during the last downturn. Steady declines in active inventory especially in the face of an improving new listings growth trend suggest that buyers are quickly putting offers on homes. It’s basically like getting a raise every year for doing nothing but owning real estate, and it’s why the rich keep getting richer. The Hawaiian housing market regained its pace for price if not for sales. 45 of the 50 largest markets are now seeing the time on market index surpass the January baseline, the same as the previous week. This would cause house prices to plummet. A seller would always prefer sales to a list price ratio of 100% or more. The suburbs are back in style, especially in affordable areas that also have outdoor recreation. NOTE: Kathy has been making annual real estate market predictions for real estate investors every year since 2005. Realtor.com’s December 2020 housing data release shows that listing prices continued to increase at double-digit rates compared to last year, fueled by buyer demand, which also continued to snap up homes at a rate almost two weeks more quickly than last year. Housing prices had already started rising before the pandemic arrived but the pandemic created a rapid acceleration in double-digits. One thing we know for sure is that the economy always fluctuates. This would make it a whole lot easier for people who may not have enough money to come up with a down payment on their own, to have the ability to buy a house. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate. It has caused unemployment to soar to at least ten percent, while tens of millions are idled. More and more homeowners (borrowers) can opt to refinance at today’s rates to cut their monthly mortgage payments. vouchers would be issued to eligible households to help cover the cost of housing. Some areas around the country might see home values fall, stay flat, or boom. With 20% year over year price growth, how hot will be housing and rental housing be in 2021? All-cash sales accounted for 20% of transactions in November, up from 19% in October but unchanged from November 2019. https://www.investopedia.com/investing/next-housing-recession-2020-predicts-zillow/  New York, NY: 1-bedroom median price dropped 1.9% from the month before $2550, and the 2-bedroom median decreased 3.0% to $2900. Even the Commonwealth Bank, Australia's biggest home loan provider, pencilled in a downturn of 32 per cent. Zillow Economic Research predicts that home values will increase by 3.6% in the next three months until Feb 2021. However, we may see home sales temper toward the latter part of 2020 and into 2021 if the unemployment rate stays elevated, but slower home sales are different than a busted housing bubble. It predicts the housing market will be the busiest before Christmas than it has been for over a decade. Unfortunately, when the oil crisis hit in 2014, thousands of jobs were lost and demand for housing nearly immediately disappeared. That’s why at RealWealth, we consider a “stable” market as one that is heavily diversified in employment and not dependent on any one sector like oil or travel. The 1-bedroom median and 2-bedroom median were down 15.0% and 17.1% from last year, respectively. By 2025. is predicting the Virtual Reality/Augmented Reality or VR/AR industry to be an $80 billion industry. “Housing demand is strong entering 2021, however, the coming year will see housing affordability challenges as inventory remain low and construction costs are rising,” said NAHB Chairman Chuck Fowke. With inventory so low as well as interest rates, housing and economic experts predict that home prices may continue to increase. Despite a seasonal slowdown and strong new listing growth in select markets, inventory continues to decrease, still posing a challenge for buyers in this late fall season. Will There Be An Housing Affordability Crisis? According to a recent survey of major housing authorities, 30-year, fixed rate mortgages will stay around 3% until the end of 2021. The more money that can chase the same assets, the more valuable those assets become. This trend is only expected to continue and become more advanced every year. With many sellers remaining on the sideline and a decline in housing starts, inventory will remain constricted. A higher ratio indicates relatively more affordability. That will push rental growth down to -1.5% year-over-year over the next couple of quarters. Property experts have also weighed in on the future of British house prices, with many siding with the CEBR’s predictions. In particular, they argued that the Federal Reserve could prompt slower growth if it raises short-term interest rates too quickly. The housing market has already been running too short of previously owned homes. https://www.investopedia.com/terms/a/affordability-index.asp San Francisco, CA: 1-bedroom median price dropped 1.1% from the month before $2800. Double-digit annual growth in both list and sale prices show an extreme lack of inventory and incredible demand — A sign of a seller's real estate market. Studio prices are down year-over-year — and down 6 percent from where they were over the summer Larger rentals, from one-bedroom to three-bedroom units, are more expensive than they were a year ago by 3 to 7 percent. Lower mortgage rates would have resulted in a monthly payment of $1,482, or a savings of $97 a month as compared to a year before. But more importantly, if the coronavirus cases do not rise at a rapid pace. House prices to bounce back in 2021 after modest falls during coronavirus pandemic, CBA predicts. Will sellers choose to go against the usual seasonal decline in new listings? The Fannie Mae Home Purchase Sentiment Index® (HPSI) is a good indicator of the houisng recovery and buyer and seller behavior. Lots of National Debt may become the “new normal.”. Total Value of Assets Acquired by RealWealth® Members. As I mentioned before, it comes down to supply and demand. Although growth in supply remains below the normal seasonal pace it continues to improve as buyers anxiously await more sellers to put fresh new homes for sale on the market. https://www.realwealthnetwork.com/learn/housing-market-predictions One thing that has been talked about a lot is that suburban housing markets are booming because of outbound migration from cities. Realtor.com's latest housing market forecast for 2021 shows that the housing boom will continue but the seasonal trends will normalize. While this may not seem like much of a difference, in the long run, it makes a big difference. The federal government ordered a de facto shutdown of the entire private economy, closing an estimated eighty percent of businesses. When that happens, the real estate market could crash or simply slow down a bit. Pessimistic housing market predictions may scare some from listing their home, but many motivated sellers will list their property. How long will it take for the economy to return to normal? Jobs disappear too quickly along with demand, Or an economic slow down occurs that causes massive deflation. We typically see a decline in demand and a big increase in time on the market before the end of November that points to a seasonal slowdown, but this demand has not gotten significantly shorter since May, and buyers and sellers are continuing to connect at a record pace. What would a timeline for a housing crash look like? The Federal Reserve foresees the unemployment rate at 9.3%, near the peak of the last recession, by the end of this year. In this case, you face a seller’s market as soon as people are allowed to go out shopping. Sales of new single-family houses in November 2020 were at a seasonally adjusted annual rate of 841,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. An index of 100 is equal to the level of contract activity in 2001. Markets that are still seeing the largest decline in newly listed homes include Nashville (-19.9%), Memphis (-18.5%), and Charlotte (-16.0%). In order to meet demand, more inventory must be built and offered at an affordable price, but it takes time to build new houses, condos, townhomes, apartments, etc. “Policymakers should take note to avoid increasing regulatory costs associated with land development and residential construction.”. But knowing that the Fed’s benchmark rate is likely to stay at its current level of near zero for a long time — analysts say that could be several years — might give companies more confidence to invest and hire. In fact, I was one of the few who predicted the Great Recession and encouraged thousands of people to sell their high-priced, low cash flow properties in the expensive “bubble” markets and 1031 exchange them for high cash flow properties in affordable, emerging markets. The 1 and 2-bedroom medians dropped 12.6% and 8.5% from last year, respectively. Canada’s housing market has defied all expectations in 2020. The inventory of newly listed properties declined by 0.8% nationally and grew by 7.6% for large metros over the past year. In the Midwest and South, properties now typically spend 13 fewer days on the market than last year, in northeastern markets the typical property spends 12 fewer days on the market, and in western metros, the typical property spends 11 fewer days on the market. A rising index reveals that lenders are loosening their credit standards. If the pandemic worsens further in the coming months, the sales are forecasted to take a hit as sellers might again de-list their properties and buyers would also stay away. While early-stage delinquencies – borrowers with one or two payments past due – have fallen back below pre-pandemic levels, seriously past-due (90+ days) mortgages remain 1.8 million above pre-pandemic levels. That’s why timing is very important, because you don’t want to be a buyer in a strong seller’s market or a seller in a strong buyer’s market. Eventually, the government will need to pay off that national debt with new debt. As the population of millennials is increasing, the demand side of housing remains strong. The latest survey finds out the percentage of respondents who think it’s a ‘good/bad time to sell a home’ vs those who think it's a ‘good/bad time to buy a home’. The next few weeks in December will be key in how the market could resist the usual seasonal decline in new listings throughout the winters. Rob Houghton, chief executive of reallymoving, said : ‘as predicted, the New Year looks set to herald a change in fortunes for the housing market following an exceptional summer and early autumn, which has pushed prices to record highs.’ In response to the COVID-19 national emergency, borrowers with financial hardship due to the pandemic have been able to receive forbearance, which is a pause or reduction in their monthly mortgage payment. Joel Kan, the MBA’s associate vice president of economic and industry forecasting said, “After seeing a drop in supply of around 60% since the onset of the pandemic, the jumbo [loan] rebounded 6.1% in October to its highest level since July of this year,” He added that “There was also an increase in ARM (adjustable rate mortgages), likely driven by the GSE’s (government sponsored enterprises) September 30 deadline for LIBOR ARM loan applications.”. Prior to the crash of 2008, our housing market was not immune to those fluctuations in the market, but they always seemed to be less severe when compared to the national housing market… Millennials are just now forming families and at the typical home buying stage in life. Speedy home sales continue in all regions of the country and the median sales price continues to have double-digit growth. Extremely low mortgage rates contributed to demand and relative affordability. An increasing affordability index means more people are priced out of the housing market. It is based on current real estate conditions around the state, as of late summer 2020. Many investors who primarily acquired at the courthouse foreclosure auction are migrating to buy bank-owned (REO) homes via online auction, which also provides the added benefit of safety from viral exposure. To put it simply, the US housing market is ripe for investment in 2020, making it a great time to buy a rental property for sale to increase your cash flow. https://www.daveramsey.com/blog/real-estate-trends People still want to own homes, and with mortgage rates low, a lot of people are taking advantage of that even though there is an apparent economic slump. Tight housing inventory was the issue for buyers before Covid-19 as well. According to some industry sources, rates are expected to rise modestly in 2021. https://www.realtor.com/research/2020-housing-market-predictions-covid-19-update/ Tech companies that buy and own homes are known as iBuyers. In other words, homes are selling faster going into the holidays. Unemployment rates will continue to improve, There will be a slight uptick in mortgage defaults, There will be a permanent shift working remotely, There will be more government spending and increased national debt, People will continue to invest in more stable, cash flowing assets, Consumers will leave big cities to buy or rent new homes, Home prices will continue rising, especially in the affordable range, Political certainty will calm the real estate market. It’s important to understand that the idea of creating money out of thin air and pouring it into the economy is meant to drive asset values up. The global pandemic shattered the world order and the US economy suffered its biggest blow since the Great Depression in the second quarter. The median home price gains marked 97 straight months of year-over-year gains (nationally). Instead, you should make the decision to buy a home based on your economic situation. We can expect home builders to focus their limited manpower and resources on luxury homes that will sell for more. Tight inventory coupled with rising mortgage rates would have lead to dropping sales. Here are their seven key predictions for how the housing market could fair in the rest of 2020. Prepayments fell 11% from October’s 16-year high; however, with interest rates at record lows and refinance incentives at an all-time high, prepay activity is likely to remain elevated in the coming months. The increase in inventory investment reflected an increase in retail trade inventories (led by motor vehicle dealers). The only exception would be the “affordable” homes that are in short supply. Before the COVID-19 pandemic, Realtor.com's national housing forecast was that home price growth will flatten, with an expected increase of 0.8 percent. When demand disappeared, the market was flooded with new homes and no workers to buy or rent them. In October, the median listing price held steady at the summer 2020 high of $350,000, resisting the usual seasonal decline for the first time in Realtor.com's recorded data history. Click here to become a member of RealWealth, 23823 Malibu Road, Suite 50419 Malibu, CA 90265 |, Home prices should continue to rise in many markets, There will be tight inventory across the country, There will be fewer home sales during recessions, There will be fewer real estate agents by 2025, The real estate agents who remain will offer more services, There will be a wider access to data than ever before, Climate change could increase the price of owning a home. Existing home sales also show the tightest housing market on record. https://www.bea.gov/data/gdp/gross-domestic-product https://www.noradarealestate.com/blog/housing-market-predictions The national housing affordability index was 170.0 for February 2020. With the results of the presidential election becoming more clear, Biden’s administration could make changes to the tariffs imposed by the Trump administration. The average monthly mortgage payment on a 30-year fixed-rate mortgage with a 20% down payment was $995, down from $1,048 a year ago. So far, since 2005, I’ve been right. It is the Melbourne housing market that fared worst with another decline in August of 1.2%. It predicts the housing market will be the busiest before Christmas than it has been for over a decade. The weakest of those 10 will see an average drop in price of 1.3%, however, this isn't as devastating as what Americans saw during the 2008 Great Recession. The experts predicted that monetary policy will be the deciding factor this time around. The decrease in government spending was in federal as well as state and local governments. We saw some of the best home sales and housing starts to pace in more than a decade until February 2020. A dense population, expensive housing and a high cost of living is already driving people away from big cities and into smaller metros or suburbs that offer more affordability and a better quality of life. We can expect a wave of mortgage refinances to save money. For everyone else, real estate is appreciating at or just above the rate of inflation. Either the economy will continue its “V-shaped” recovery and continue to increase housing prices, or market conditions will level off and supply will catch up with demand over the coming months, stabilizing prices in 2021. Still, there will be some businesses that do not survive this crisis and workers who will remain unemployed. And the Fed usually gets what it wants. Affordable housing just wasn’t profitable enough, especially in 2nd and 3rd tier cities. It also shows the strength of the recovery since the beginning of May. If a stock market crash does happen in 2021, as historical data suggests, be ready to go shopping. Experts think that the economic cost we’ve paid to try to contain the virus will weigh down the economy into 2021. That also tends to drive home prices up as more and more people are chasing the same limited inventory. In response to such queries, we typically publish a long-range outlook full of real estate predictions for the upcoming year. According to N.A.R,'s recent forecast, for all of 2020, existing-home sales are expected to increase by 1.1% compared to 2019, with sales ramping up to 5.4 million by the fourth quarter. It’s been a rollercoaster year for the housing market which looks to end on a strong note. This is good for buyers, and not so good for sellers. The price index for gross domestic purchases increased by 3.4 percent in the third quarter, in contrast to a decrease of 1.4 percent in the second quarter (table 4). This improvement in new listings is still not enough to mark it as a buyer’s real estate market and it going to continue to be difficult for buyers to find their perfect home, while sellers who face little competition amongst each other may find selling their home easier this fall season than is typical. The program is meant to help build communities that have been neglected and underfunded, as well as offer an affordable option for housing to public service workers. This is a 3.4 percentage point, or 392,952 household decrease from the share who paid rent through December 20, 2019, and compares to 90.3 percent that had paid by November 20, 2020. Here are the housing markets that will be hit hardest. A trend that started before 2020 but really picked up speed after the COVID-19 outbreak is migration out from big cities and into the. The housing market will crash for sure, but it wont have anything to do with POTUS. The most recovered markets for new listings included San Jose, San Francisco, Seattle, Boston, and Las Vegas; with a new listings growth index between 148 and 176. The increased long-term delinquency is due to participation in forbearance programs, and foreclosures are down 80% year-over-year. Along with causing … But suburbs had the lowest rental vacancy rate of 5.5 percent, 1.5 percentage points lower than principal cities. This money is designed to assist individuals and families who may not qualify for the Section 8 voucher but are still struggling to cover rent. Industry experts believe the housing market will remain strong and is set to break more records in 2021. Recovery is also expected to be uneven. In the past few months alone, offers have come in at 20% over asking price simply due to high demand and low supply. With the lack of inventory on the market, distressed homeowners can try to sell their property at full market value, instead of losing all the equity they’ve built. In September, 8.5% of renters (2.82 million households) missed, delayed, or made a reduced payment, while 7.1% (3.37 million homeowners) missed their mortgage payment. But if rates stay this way or possibly even go a little lower in 2021, then it will keep the homebuyers active and they would keep the housing market afloat. $513,755.12 dollars donated and counting. Hence, home price growth will flatten, with a forecasted increase of just 1.1 percent. The NAHB gets input from builders on how confident they are in the housing market based on buyer behavior, sales, and incorporates any forecasts as well. With supply-constrained and demand boosted, house prices seem to rest on solid foundations for next year. The overall recovery index is showing the greatest recovery in Seattle, Los Angeles, Boston, San Jose, and San Francisco, largely driven by improvements to the inflow of both buyers and sellers. Regionally, all the 50 markets are positioned above the recovery trend, the same as the previous week, as buyer demand remains strong heading into the December holidays. We ditched our 7-office lease near San Francisco, and instead invested in annual retreats for our employees to get together. Those sales are allowing builders to raise prices. The number of homes for sale has plummeted and remained down around 30 percent of what it has been in recent years — leaving the market with nearly twice the demand and two-thirds of the supply. . With supply at record lows and buyer competition showing continued strength, sellers have newfound leverage, enabling the fastest listing price growth recorded in more than two years. This is important since half of all home mortgages are given to Millennials. Both the 1-bedroom and 2-bedroom medians were down about 21% from last year. Predictions for Housing Markets in 2021 The housing markets did contract hard in the pandemic period across the globe. So after May 1st, that index started to go up, it passed 85 in mid-May and then continue to work its way up rather quickly. Housing Affordability is driven largely by the gap between household income and home value. The housing market too briefly hit pause in spring due to uncertainty and widespread stay-home orders but 2020 was a record-breaking year in the residential real estate market. Year over year, the HPSI is still down 11.5 points but it has recovered more than half (60%) of the early pandemic-period decline, mirroring the strong home purchase activity of the past few months. The graph below charts the index by showing how the real estate market started strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. We can learn from the past to prepare for the future. Pending home sales fell slightly in October, according to the National Association of Realtors. (When real estate is treated like a business, the tax incentives are even better.). Cincinnati is a great example of that. Usually larger metro areas have an advantage when it comes to rental properties. December's Housing Stats Hawaii Hawaiian Real Estate Market Stats. On the other hand, the Dallas properties never lost value, and in fact, tripled in value 10 years later. The rental market appears poised to turn the corner and demand for rental units is expected to surge in 2021. Homeowners and investors who financed their property can count on rising inflation to eat away at their debt while the asset increases in value. It’s also not great if you’re sitting on a pile of equity as it becomes less valuable every year. At the beginning of 2020, local markets across the state were bustling with activity and competition. Three of the six HPSI components decreased month over month, with consumers reporting a more pessimistic view of homebuying conditions, including mortgage rate expectations, but a more optimistic view of home-selling conditions and home prices. The first five are critical. In a bid to pump the market, Fannie Mae resorted to loose lending requirements so that customers with a weak credit score or low savings could buy a house. Seasonally adjusted home prices are expected to increase by 1.2% from August to November and rise 4.8% between August 2020 and August 2021. There are 10 signs of a housing market crash. And…pop goes the bubble. Real estate activity has been going on at an unusual pace. With real estate, both the underlying asset and the rents tend to increase overtime. In a … The lack of supply cannot be fixed overnight. Employers and households also could benefit from cheaper borrowing rates for houses, cars, and other loans. Strong growth is expected in 2021 for housing sales, rents, and home prices. After rising to 5.3% y/y in the third quarter, growth will slow to 2.0% y/y by the end of next year. Despite that, there is little sign so far that the housing market is about to subside. The home price forecast has been adjusted to higher for 2021. For the year 2021, Yun projects existing-home sales to reach 5.86 million, supported by an economy that he expects to expand by 4% and a low-interest-rate environment, with a 30-year mortgage rate average of 3.2%. They will likely stay put, which will in turn, affect supply. Record-low mortgage rates are likely to remain in place for the rest of the year, and all the Fed’s policymakers foresee no rate hike through 2022. A study by HUD showed that. Below 50 indicates a negative outlook. reported that the bulk of new homebuyers are now Hispanic Americans. How quickly will the service economy re-open and get people back to work? The Census Bureau reports rental vacancy and homeownership vacancy rates each year through its American Community Survey; you can get these at the city level or in some cases for even more fine-grained areas. You didn’t find a lot of public builders clamoring over Ohio, yet now the metro area is booming with people who desire the white picket fence and the good old fashioned American Dream. As new inventory comes on to the market. A multi-generational housing market is creating limited supply and increased competition, driving up prices at the affordable end of the market for the foreseeable future. The pace of existing-home sales has jumped to a level not seen since 2006 and, importantly, was followed by strong pending sales, purchase mortgage applications, and construction data. There’s optimism around the property market at the moment, with Rightmove saying the average time to agree a sale was just 57 days in December, compared to 71 days a year earlier. 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