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March Signs Mean That Recovery Is Near

by gbaf mag

In a report released today, researchers at the Boston College Center for Real Estate Education released their findings from a survey of over 800 individuals in 14 cities across the United States. The survey highlights the accelerating trend toward off-campus housing and the spreading of the disease, particularly in major cities, while also indicating that slow but steady price increases in more urbanized areas might hold back price increases for a time while core housing markets recover. The research offers several policy implications as well, particularly important for those who are planning to buy a new home or rent an apartment. The analysis is detailed and includes many details that you will find interesting.

First, the housing market is not immune to recessions, and depressions. Housing prices have dropped in the past 20 years in certain parts of the country including California and Las Vegas, even as others have risen. Housing prices typically rebound after a period of economic weakness, but this does not appear to be the case with the housing market currently. The current decline is being driven by a number of factors, including tightening mortgage regulations, higher interest rates, and slower sales and employment growth. Homeowners are concerned about the possibility of being “foreclosed on,” and many are concerned about the possibility of lower income and lowered quality of life associated with residing in a foreclosure. Concerns about economic conditions could lead to a sharp increase in real estate prices.

One reason for the recent drop in housing values is the sluggishness of the recovery. Housing values tend to increase when the economy is doing well and fall when it is struggling. As one of the drivers of the national economy, the slow recovery has caused housing market analysts to be increasingly pessimistic about the outlook for housing values. Most of them believe that a return to previous robust economic conditions over the next few years will be highly unlikely.

Another factor contributing to the decline in housing values is the relatively slow rate of job creation in the U.S. In most metro areas across the country, job growth has been extremely low. One of the reasons for this is the very low level of new home construction that has historically been the norm. Another reason is that while many states and local governments have enacted regulatory frameworks that are encouraging the construction of new homes, these regulatory frameworks are often having an unintended effect on the home building market, resulting in less than competitive pricing for new homes.

Homebuyers should expect homebuyer rates to continue their decline through at least the next two years, especially if the Bank of America-sponsored Homebuyer Affordability and Standards Program (HASP) continues to increase mortgage delinquencies. Currently, according to the Mortgage Wire Research, mortgage delinquencies are at their highest level in six decades. However, despite the recent increase in mortgage delinquencies, there is still a significant amount of market volatility that can result in falling home sales during the coming year. Most experts agree that it is too soon to even consider possible homebuyer’s prices in the face of historically low mortgage delinquencies.

Even with the recent increase in lending rates and affordable mortgage rates, many experts agree that it may be years before homebuyers are able to purchase a typical priced home in the wake of a diminished and stagnant housing market. One contributing factor to the lack of optimism is the recent string of high-profile buyer mistakes that resulted in losses for American homeowners. In August of 2020, eBay finally reported that one of their members had sold his home for twice the price that he paid. Just a few months later, Bank of America released news reports that indicated that they were underwriting loans in underwriters were consistently making mistakes. Also in the fall of 2020, Countrywide was discovered to be opening up millions of homes in neighborhoods that were in danger of foreclosures.

The lack of optimism regarding the outlook for the housing market can be attributed in part to political turmoil in the United States. Currently, there is much doubt that legislation will be passed that will result in meaningful and sustainable relief for homeowners across the nation. For example, the disapproval of the Stop Fast Foreclosure Act by the Senate may lead the House to move against it. The disapproval of President Obama’s housing secretary, Tim Geithner, may force the president to make a recess appointment for members of Congress who support the legislation. Furthermore, disapproval of HUD secretaryaniel Hispanics and Housing secretary Henry Butterfly could lead to a significant slowdown in work on final projects. All of this leaves analysts with less than optimistic expectations about the ability of the current stimulus package to reinvigorate the housing market.

According to several real estate professionals interviewed by the Real Estate Weekly, it is likely that the housing market will experience an “asterisk” in the second half of 2020. As mentioned earlier in this piece, officials are watching for any sign of outbreaks of the “botox virus”, a common cause of respiratory infections. In addition, there are also signs that the widespread outbreak of cold and flu season may result in higher volumes of traffic at hospitals and other health care facilities, which could further compromise the market.


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