The declaration of covid-19 pandemic in early 2020 as a national health emergency forced governments to impose movement restrictions to help contain the spread. This, together with other policies, adversely affected different sectors of the economy, the housing market included. Many organizations resolved to have their employees work remotely. This necessitated suburban settlement for families as students also conducted their studies on online platforms from home.
This started a trickle down effect that has been effecting the housing market through 2021. What first started as individuals not wanting or able to sell a home has lead to at home offices and changes in daily life. This eventually lead to a housing boom and major shift.
Low mortgage rates, which sit below 3%, accompanied by the high demand for houses, led to a soar in the prices. Statistics indicate that more existing homes were sold in 2020 than any other year since 2006. Which made mortgages cheaper.
However, the latest market trends (observed in May/June 2021) exhibit a twist in real estate activity. According to Realtor.com, reduction in time-on-market has decelerated in almost four months. Implying some properties stay a little longer on the listing portals. Besides being overvalued, the housing market is not in a bubble.
This is attributed to the following factors:
Spiking Prices Within The Housing Market
Home prices have shown an incredible increase. They are up double digits nationwide since the beginning of the covid-19 effects. This comes on the background of stable price gains dating back to the worst in the repercussion phase of the 2008 financial crisis. Currently, there is a shortage of new homes to meet the demand.
The relative vacancy rate for homes for sale is lower. More restrictive zoning, expensive material, and labor costs have affected homebuilders’ ability to put up homes.
Evident Emergence of Stress Lines Within The Housing Market
The rapid surge in home prices has rendered them overvalued. Countrywide, the prices appear overvalued by roughly 10% to 15% when comparing price-to-income or price-to-rent ratios eventually historical averages. Other markets even by 20%. These markets are therefore susceptible to price correction when mortgage rates rise.
The Federal Reserve believes the economy is set to a full recovery. Hence normalizing interest rates. Companies are most likely to recall their employees back to the office. The foreclosure moratorium, mortgage, and student loan forbearances are expected to expire soon.
“ATTOM released its May 2021 U.S. Foreclosure Market Report, which shows a total of 10,821 U.S. properties with foreclosure filings (including default notices, scheduled auctions, or bank repossessions) down 8% from a month earlier, but up 23% from a year ago. Foreclosure starts, meaning the initial notice of default on a mortgage, grew 36% year-over-year.” – nationalmortgageprofessional.com
Home Equity Partner Options
Lease-to-own agreements give the renter an option of buying the home. At a specified future time on completion of the pre-specified installments. At ‘Home Equity Partner, prospective buyers who have struggles obtaining traditional bank loans. But they do make consistent income, have initial payment and want to own a home get a chance to do so.
“According to Urban Land Institute, real estate market conditions and values in the U.S. are expected to rebound in 2021 and trend even higher in 2022, with single-family homes outperforming other sectors such as commercial, retail, hotel, and rental. Home prices will grow an average of 4.1% over the next three years. Above the long-term average of 3.9%, according to the report. Based on a survey of 43 economists at 37 leading real estate organizations.” – noradarealestate.com
All one needs to do is select the desired home. The company then buys and leases the house to the customer. No matter why you can’t get into a new home, Home Equity Partner might be the solution for you!
