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How Has the U.S. Managed to Avoid Another Foreclosure Crisis?

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As the COVID-19 pandemic began to spread across the United States last spring and states announced shut downs, many Americans found themselves unemployed or underemployed.  As a result, the federal government took swift action to provide mortgage payment relief by allowing homeowners to enter forbearance.  A year later, as of March 2021, 2.5 million homeowners were still in forbearance, according to the Mortgage Bankers of America.

Realtor.com published an article, noting the opinions of experts who explain that, despite this alarming number of U.S. homeowners behind on payments, a potential foreclosure crisis is unlikely.  In the article, reporter Sharon Lurye explains, the current housing market conditions are likely to provide a safety net for many of homeowners.  Houses, in many parts of the United States, continue to be in high demand and the inventory remains low.  Coupled with low interest rates, homeowners behind on payments, possible nearing the end of their forbearance, could still decide to sell the home for a profit. Additionally, as Americans getting their footing and learn to adjust to the current conditions, forbearance rates dropping nationwide.

Nevertheless, there are still areas of the country where homeowners are not only seriously behind on payments, but the housing market is not as strong due to weak economies and lack of employment.  These homeowners will continue to need assistance by reaching out to their lender with the hopes of renegotiating the terms of their loan in a way that makes it feasible to make the payments.  Still, some may decide to just sell and move to a rental property, assuming they can find a property to rend. 

The good news, it seems that the U.S. isn’t headed toward a wide-spread foreclosure crisis, however there are Americans that continue to struggle and may for months and years to come.

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What Do Experts Predict for the 2021 Housing Market?

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As the new year rolled in, many have reflected on a year of unexpected and historic events and how they impacted many aspects of the lives of Americans.  The real estate market had its share of ups and downs as Americans adjusted to new realities of shutdowns, spending more time at home, and mortgage rates that continue to remain exceptionally low.  It leaves many real estate professionals and American homeowners and would-be home owners trying to predict what 2021 could possibly have in store for them.

In a piece published by Norada Real Estate Investments, written by Marco Santarelli, many questions for the future of the market in 2021 are posed and explanations and predictions are provided.  The article addresses questions Americans might have about a potential affordability crisis, if the value of homes will continue to rise, what the trends in new home construction might be and whether or not a housing market crash is predicted in 2021.

Santarelli indicates, “While we still face economic and health challenges ahead, it is no doubt that the nation will continue to recover from this pandemic and an improving economy will continue to prop up the housing market competition. Industry experts believe the housing market will remain strong and is set to break more records in 2021.”  He describes how it continues to be a seller’s market and a continued rise in home prices could lead to affordability issues.

To add, some experts, such as Zillow Economic Research, predict that home values will, in fact, continue to increase.  Some predictions call for a 3.6% increase over the next three months and appreciate of home value by up to 10% through the end of 2021. 

As the demands for houses continues to outpace the availability, new home construction attempts to fill the gap.  However, according to the article, “Land and material availability and a persistent skilled labor shortage will continue to place upward pressure on construction costs resulting in limited housing supply.”

Read the entire article for more predictions for 2021.

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How Long Will the COVID-19 Real Estate Boom Last?

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The pandemic has impacted Americans in a variety of ways.  To say the real estate market, in many parts of the U.S., has changed in unexpected ways would be an understatement.  The demand for homes far outnumbers the supply in many areas of our country.   

According to an article published by CNBC.com,  reporter Kevin Stankiewicz finds, “Existing home sales increased 9.4% in September, surpassing expectations, and the median purchase price rose nearly 15% year over year, according to data released earlier Thursday by the National Association of Realtors.”

Consumers are enticed by low interest rates and, those who can afford and are able to, are moving out of major metropolitan areas to suburban areas or even to second homes in vacation areas, where they might be able to work remotely. 

Although buyers continue to search for homes and rush to put an offer in when they find the perfect home, the number of homes for sale has tightened up.  Nevertheless, it is anticipated that after the election, more sellers may decide to put their homes on the market.  One professional, Glen Kelman of Redfin, is quoted in the article, “I think the sellers are just looking long term at the economy and still feeling some anxiety. Many of them are going to put their homes on the market in January and February.”

While many realize the type of demand for homes that has been occurring since the summer of 2020 cannot last forever, its is expected to continue into the new year as more and more Americans find ways and reasons to relocate.    

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How Would a Recession Affect the Housing Market?

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The stock market has taken some big hits over the past weeks as a result of the global pandemic of COVID-19.  Many Americans are wondering if the next recession is around the corner.  Some may be wondering if the housing market will also see declines that parallel stock market drops.

MarketWatch.com published an article, written by Jacob Passy, that may put real estate owners at ease when it comes to the value of their property. According to the article, experts don’t necessarily believe that a potential recession will significantly impact the housing market.  “While the housing crisis is still fresh on the minds of many, and was the catalyst of the Great Recession, the U.S. housing market has weathered all other recessions since 1980,” wrote Odeta Kushi, deputy chief economist at First American and the report’s author. “In fact, the housing market may actually aid the economy in recovering from the next recession — a role it has traditionally played in previous economic recoveries.”

Nevertheless, homeowners should stay informed and aware of the climate of the economy because different economic factors can have an impact on the housing market.  As we see declines in the stock market, consumers may feel more hesitant to move forward with a home purchase, therefore impacting home sales.  Another economic change that could influence the real estate market are the loss of jobs.  Increased unemployment could, in turn, lead to foreclosures if the homeowner can’t keep up with their mortgage payments.  Foreclosures, according to the article, “can have a ripple effect through a local market, causing other homes to drop in value. “

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Real Estate Expert’s Grim Outlook on the Housing Market

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Some real estate experts are concerned about the future of the real estate market and their conclusions about the real estate market may make some homeowners take pause.

In an article published by DSNews.com, titled “Residential Real Estate on ‘Shaky Ground’”, an interview with real estate analyst Keith Jurow is summarized.  The article states he doesn’t believe there was really any real estate recovery, In fact, according to Jurow, “the “illusion” stems from lenders and mortgage services not putting foreclosed properties on the market.” 

The market is at risk of due to factors such as subprime mortgages, poor home sales and mortgage defaults, despite many mortgages being modified.  Shockingly, the article notes, “There are currently $800 billion of subprime mortgages still outstanding, many of which have not been paid at all in the last five years.”

Jurow’s alarming conclusion is homeowners considering selling before the market gets much worse.  Read the entire article.

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How is the New Housing Market Faring So Far in 2019?

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The 2019 real estate market is approaching the halfway point of the year and recent statistics published jointly by the Census Bureau and Department of Housing and Urban Development reveal an interesting mix of ups and downs within the new housing market.  The good news is that new house prices have increased 8.8% from last May.  However, disappointing drops in the sale of new single family homes was also reported, they fell 6.9% 

An article published by Bloomberg, reported by Reade Pikert, offers some explanation behind these conflicting statistics.  A detailed view of the home sales decline reveals that the home that are experiencing the decline in sales are almost all priced below $300,000.  Thus suggesting there is a shortage of “affordable” properties. 

Additionally, sales of existing homes took a dip in April, yet the number of sales of pre-construction properties reached the highest level since 2017.  Pickert indicates, “New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.”

Despite the mixed reviews of the new housing market’s 2019 performance thus far, it seems investors remain optimistic.  The article states, ”A gauge of U.S. homebuilding-industry stocks erased losses after the data and was up about 0.3% despite losses in the broader market, suggesting investors were focusing on the upward revisions to new home sales.”

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A Drop in Mortgage Rates for the Start of 2019

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Throughout much of 2018 many experts were speculating, as they do each year, how mortgage rates would change heading into 2019.  As we saw rates continue to slowly climb throughout 2018, it was natural that many industry professionals assumed the trend would continue into the new year.  However, it doesn’t appear those predictions are holding true, at least not for the first few weeks of 2019.

In an article published by the Washington Post, author Kathy Orton states, “Stock market volatility, global trade worries and the government shutdown are pushing rates down to their lowest levels since August.”.  Recently the 30 year fixed rate dropped to about 4.51.  In fact, Lending Tree released a report showing about 70% of home purchasers secured a rate below 5 percent. 

Some in the industry believe that rates may drop further.  Many are speculating the effects the government shut down, treasury yield rates, as well as jobs report data on mortgage rates.  Nevertheless, the current drop in mortgage rates coupled with slowed home price growth should entice home buyers to take action.

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Has The Government Shutdown Affected Real Estate Industry?

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As our federal government shutdown enters its third week,the effects have been widely publicized in the media.     Effects big and small, local and far reaching are on the minds of all Americans as they wonder how long the shutdown will continue.  Real estate professionals and their clients are not immune to the disruption caused by the shutdown.  However, its debatable as to how much affect the shutdown has had so far on the real estate industry.

 According to an article published by National Mortgage Professional Magazine, written by Phil Hall, industry experts have different opinions on the impact of the federal government shutdown on the housing industry.  A survey completed by National Association of Realtors found only 75 of 2211 NAR members reporting the shutdown affected real estate transactions.  Less than 20percent of those surveyed reported negative impacts such as delays in closings or closing related processes such as income verification. 

 However, Zillow did issue a warning after determining “…that federal workers who are not being paid because of the shutdown will owe about$249 million in mortgage and about $189 million in rent payments for January.Approximately 800,000 workers are being furloughed or required to work without pay during the shutdown.”

Experts agree, however, the longer the shutdown continues, the impact will becoming more widespread and far reaching.

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Real Estate Experts Provide Advice for Investors

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Real Estate is a popular investment vehicle for American investors.  In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate.  In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.

One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase.  Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.

Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later.  The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection.  It can also make the buyer aware of repair expenses they should plan for later.  A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.

The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.

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Photo Credit: Antonio Carlos Cascatrina

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Could 2018 Be The Right Time to Sell Your Home?

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If you have been waiting for the right time to sell your home, there are many reasons experts are saying that the time has come.  In an article written by Devon Thorsby, published by U.S. News and World Report, the reasons that 2018 might prove to be a good time to sell a home are listed.

First and foremost, the past few years of low inventory of homes for sale has left prospective home buyers more than ready to scoop up the perfect house.  Their frustration with available homes has led many house hunters to begin their search earlier than normal with the hopes of purchasing a home before other buyers make their offer.

Additionally, interest rates are still relatively low.  They have been slowly creeping up and are expected increase to 5 percent in 2019.  Many home buyers are motivated to purchase a home sooner rather than later in order to secure a lower interest rate.

Thorsby details additional rationale for putting that “For Sale” sign up this year.  Read the entire article here.

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