So many people predicted that the housing market would crash last year due to the pandemic. In that spirit, there are several who subscribed to the notion that the real estate and housing market would remain strong for a very long time. They hold this notion because of the record low inventory, the interest rates and demand. The pandemic which had crashed several industries like the hospitality and travel industry has been a blessing for the housing and real estate industry. That may very well be true but one constant factor is that there is no certainty neither is there a constant. The underlying problems that the economy faces should not be ignored either. The government is not Santa Claus and would not hand out a 2 trillion dollar check if all was hunky-dory.
How these things often work is that things would get a lot worse before they attempt to get better. The problem then lies when things get worse when no one is looking for it. While we all want the boom in the housing market and for the said boom to last forever, the truth is that it will not. Several dynamics affect the housing and real estate industry. Currently, in the United States, 1 in 5 people is behind on rent, 2.8 million have their mortgage in forbearance, 35% of the population have a FICO score below 680, the collective amount Americans have in home equity is 10 trillion dollars, and the unemployment rate in the United States is at 10%. Despite all these, the housing and real estate industry is currently experiencing a market boon. Back in the early 2000s, from 2003 to 2005, the biggest boon in real estate and housing was experienced. As real estate agents are paid in commission, increase in sales means increase in commission. This made real estate agency the hot cake then. In those days, it felt like there were no listings and no inventory. There were over a million listings in the early 2000’s than in the past four years. It seems we are witnessing a return of the turn of the century in the housing market today. Sales volumes have been edging up slowly, rising to as much as 5.7 million in the first quarter of 2021. The increase in speed in the housing industry is felt by pretty much everyone. A lot of listings have hit the market in January and February. Though it may not seem like it because they are selling quickly with multiple offers, it is true nonetheless. The economic signals point to the same thing, we might be heading towards a peak again. The home values have soared with a jump in the buyer demand and the mortgage rates hitting new and historic lows. The thing is this though, the housing market is always in flux with the real estate trends as fickle as the wind. The fact that the industry is highly, subjected to different conditions in every city, state and metro area shows that the current boon cannot be expected to remain for long. You can use this current market data to run accurate calculation. The role of the Federal Reserve in supporting the economy is in favor of the housing industry by keeping borrowing cots low for shorter-term loans. This has had a huge impact on the interest rates including the mortgage rates through its control of short-term interest rates. The Federal Reserve also helping to keep the mortgage rates low by buying huge amounts of agency mortgage-backed securities (MBS). There are indications from the Fed that it intends to keep the low rates until at least 2022. According to Fannie Mae's April National Housing Survey, 47% of the respondents say that this is a good time to buy a home. This result is the lowest in the survey's history. On the flip side, 67% of the respondents believed April to be a good time to sell your home. Throughout history, dating as far back as 2010, this is the first time that the difference between the two shares is the negative. This also indicates that we are heading towards a peak home-buying season where buyers will be faced with challenges due to a shortage of homes available for sale. The surge in prices and higher mortgage rates would also detract potential buyers from venturing into the market. It is possible that the potential buyers on the market would find what suits them as more and more people put their houses on the market for the spring buying season. According to Freddie Mac chief economist, Sam Khater: “As the economy continues to improve, we expect conditions o remain generally favorable for the housing and mortgage market. Higher mortgage rates have the potential, however, to dampen the robust demand we have been experiencing.” The current trends are obviously favorable to the housing and real estate market this year, and they are expected to make great gains. Related sources include; 1. https://www.noradarealestate.com/blog/housing-market-predictions/ 2.https://therealdeal.com/2021/04/20/fannie-freddie-say-housing-market-could-see-slight-hiccup/ 3.https://www.forbes.com/sites/forbesrealestatecouncil/2021/03/22/2021-housing-market-trends-what-buyers-need-to-know/?sh=3b572fd40b3c 4. https://www.agentimage.com/blog/real-estate-marketing-trends-to-watch-out-for-this-2021/ 5. https://www.mashvisor.com/blog/real-estate-marketing-trends-2021/amp/ 6.https://www.fool.com/millionacres/real-estate-market/real-estate-trends/real-estate-trends-guide/ |
Da BlogRandom Posts and thoughts and fund facts about investing in Denver Real Estate. Archives
February 2023
Categories |
HoursSeven Days per week:
6am to 9pm |
Telephone720-515-5117
|
Current Tenants: |