Housing Market Update: Sales, Looming Evictions and Government Inaction
Since the start of the pandemic, few things are exactly as they were in early March. All aspects of our lives have changed, from how we shop, to how we work. Same is true for the housing market. Federal government legislation and changes to businesses have impacted the market for home buyers, sellers, and renters. As we head into the month of August it is a good time to step back and take a snapshot of where the housing market is for Massachusetts and the rest of the nation. Here are some of the things the team at Streamline Realty are keeping an eye on:
National Home Sales
The pandemic has taken a toll on millions of Americans. Many people have lost their jobs either temporarily or permanently. However, this has not stopped people from buying and selling homes. According to The Wall Street Journal, “The housing market came roaring back in June, as low mortgage rates and increased economic activity helped push sales of previously owned homes up 20.7% from the prior month.” This makes sense given that 30 year fixed-rate mortgages are at a record low of 3.07%. Although many people are facing economic insecurity, there are still many who are looking to take advantage of these rates. The Wall Street Journal says, “Demand was strong from apartment renters seeking more space, young families moving to the suburbs, and wealthy city dwellers looking for second homes.”
These trends might continue. Some predict that mortgage rates might go even lower by the end of the year. This is because the pandemic has not gone away, so it is possible that the government will drop rates even more to help boost the economy. This is already on top of the fact that pending home sales increased by a record 40.3% in the month of May according to the National Realtors Association. It is clear that the pandemic is not stopping a lot of people from dreaming about their new home.
There is some concern about whether or not these trends will continue. Although lots of people are interested in taking advantage of low mortgage rates for home purchases, there are not as many people interested in selling. Some speculate that less people are willing to sell their home because of uncertainty surrounding the pandemic. This means there just might not be enough homes available for all of the willing buyers in the market.
Ironically, this might mean it is the perfect time to sell your home if you have been on the fence. Declining inventory and a bunch of motivated buyers means that you might get more than you were expecting! If you are one of those people who have been considering putting your home on the market, the team at Streamline Realty can help you take advantage of this seller’s dream.
Mortgage Madness
Unfortunately, the number of people who are filing unemployment claims is still increasing. This means that a lot of families are falling behind on their mortgages. A recent article on MarketWatch broke down just how serious of a problem this is:
“According to data provider Black Knight Financial Services, 46% of borrowers who obtained a forbearance actually made a mortgage payment in April. However, that percentage has plunged over the past two months. According to Black Knight, 22% of borrowers had paid their mortgage in May and only 15% did so in June.”
The federal government took some measures back in April when they issued a moratorium on foreclosures on all mortgages through Freddie Mae and Freddie Mac. This moratorium was set to expire at the end of June; however, it was extended through August 31st by the Federal Housing Finance Agency. Some legislators have introduced legislation to expand the moratorium for a full year. However, when it comes to congress, it is hard to predict if this legislation has any hopes of passage.
We will have to wait and see if the government kicks the can down the road again now that we are almost a month away from the new expiration date. If not, a lot more homes might be on the market sooner rather than later. If you are a buyer, you might want to wait a little bit to see what the government does. If you are a seller, it might be best to put your home on the market right now.
Landlord Loophole
Mortgage holders were not the only people that a got a reprieve from the federal government. Inside the CARES act, which was passed back in April, there was a provision that placed a national moratorium on evictions for renters. The moratorium on evictions just expired last week.
Congress is currently debating what the next round of stimulus legislation should look like to help our nation get through the economic uncertainty caused by the pandemic. The House of Representatives passed their own version over a month ago and the Senate just released their version this week. Unfortunately, both sides are pretty far apart on what the final legislation should look like. So, there is no telling when we will get some much-needed help and it is anyone’s guess what will be included.
Without an extension of the eviction moratorium or more stimulus checks, renters and landlords could be in for some tough times. As bad as things look for mortgage payments, the situation is even worse for rent. Some predict that without new legislation up to 11 million households could be evicted in the next four months. If these worst-case scenarios become realities, it could mean chaos for the housing market and the economy.
The good news for those of us in the Boston area is that we are best suited to handle this kind of uncertainty. A recent article on HousingWire explains why Bostonians are in the best position to weather the storm:
“Boston was ranked the most resilient U.S. city with numerous prestigious universities and hospitals among its top employers....according to a recently released report from home co-investment company Unison, its first Resilient and Vulnerable Cities report. Boston is also home to some of the world’s largest insurance and investment management companies. Beyond education, healthcare, and financial services, Boston also has strong employment representation from biotech, technology, and government sectors, the report noted. It was followed by Washington, D.C., and then New York City (its five boroughs) and San Francisco in terms of resilience.”
In the world of Covid-19, things change quickly. The team at Streamline Realty knows that this can make it difficult to make big decisions like buying or selling a home. This is why we are doing everything we can to stay on top of everything that impacts the real estate market. We want to help you make the most informed choice possible for you and your family. Contact us and we will help you navigate this market.