#home #shortage #demand
In spite of the chaotic economic downturn last Spring, a home buying frenzy boosted home prices by almost 9% and pushed available housing inventory down 30% in August compared to the same time last year, according to Zillow.
A foreclosure moratorium on federally-backed mortgages which was designed to keep people in their homes during the virus chaos, has inflated the housing market, according to economists.
“That is a whole bunch of inventory [homes in forbearance], which would normally actually be selling at fire sale prices. Where instead — and I mean this is great news for those folks, that they can hunker down [and] they can stay put, but it is actually kind of locking up a lot of home inventory,” an economist at Zillow told the press Wednesday.
In the Great Recession of Y 2008, banks foreclosed on nearly 2% of the houses in the US unleashing a glut of houses onto the market and causing home prices to dive.
But today the Coronavirus Aid, Relief, and Economic Security (CARES) Act instituted protections to keep people in their homes during the coronavirus chaos, offering foreclosure moratoriums and mortgage forbearance options for homes with federally-backed mortgages.
As the economy recovers, some 7% of mortgages are still in forbearance, according to the Mortgage Bankers Association. But forbearance and foreclosure protections will not last forever, and for many homeowners, mortgage payments are stacking up, which could spell uncertainty for the housing market next year.
Mortgage forbearance is “going to expire for a lot — millions — of homeowners in March, April, May of next year. It’s a really big open question. How many of those folks are back in work by then? How many of them are able to get back on track with their mortgage payments?” said the economist.
But these protections are not the only reason housing supply is so low. There has been a shortage for about 10 yrs, and now 5-M millennials are reaching the age where they want to buy, driving demand.
Demand skyrocketed this Summer beyond what was predicted: pending sales in the last week of August were up 19% from the same time last year.
Have a healthy day, Keep the Faith!
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