As we enter the final months of 2020 and continue to work through the challenges this year has brought, some of us wonder what impact continued economic uncertainty could have on home prices. Looking at the big picture, the rules of supply and demand will give us the clearest idea of what is to come. Due to the undersupply of homes on the market today, there’s upward pressure on prices. Consider simple economics: when there is high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in bidding wars, which will also drive price points higher in the home sale process. There’s no evidence that buyer demand will wane. As a result, experts project price appreciation will continue over the next twelve months. Here’s a graph of the major forecasts released in the last 60 days: I hear many foreclosures might be coming to the market soon. Won’t that drive prices down?
Some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low. Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, was very firm in a podcast last week: “The likelihood of us having a foreclosure crisis again is about zero percent.” With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate. Bottom Line Originally, many thought home prices would depreciate in 2020 due to the economic slowdown from the coronavirus. Instead, prices appreciated substantially. Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale. SOURCE KCM #Pricing #ForSellers #ForBuyer #SimardRealtyGroup #eXpRealty
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Not only has the housing market survived this year’s crisis, it’s come out of it stronger than it was before. DM me if you’re ready to take advantage of everything the housing market has to offer this fall.
#marketrecovery #realestate #homeownership #homebuying #realestategoals #realestatetips #realestatelife #realestateagent #realestateexpert #realestateadvice #realestatemarket #realestatetipsandadvice #keepingcurrentmatters Many housing experts originally voiced concern that the mortgage forbearance program (which allows families impacted financially by COVID to delay mortgage payments to a later date) could lead to an increase in foreclosures when forbearances end.
Some originally forecasted that up to 30% of homeowners would choose to enter forbearance. Less than 10% actually did, and that percentage has been dropping steadily. Black Knight recently reported that the national forbearance rate has decreased to 5.6%, with active forbearances falling below 3 million for the first time since mid-April. Many of those still in forbearance are actually making timely payments. Christopher Maloney of Bloomberg Wealth recently explained: “Almost one quarter of all homeowners who have demanded forbearance are still current on their mortgages…according to the latest MBA data.” However, since over two million homeowners are still in forbearance, some experts are concerned that this might lead to another wave of foreclosures like we saw a little over a decade ago during the Great Recession. Here is why this time is different. There Will Be Very Few Strategic Defaults During the housing crash twelve years ago, many homeowners owned a house that was worth less than the mortgage they had on that home (called negative equity or being underwater). Many decided they would just stop making their payments and walk away from the house, which then resulted in the bank foreclosing on the property. These foreclosures were known as strategic defaults. Today, the vast majority of homeowners have significant equity in their homes. This dramatically decreases the possibility of strategic defaults. Aspen Grove Solutions, a business consulting firm, recently addressed the issue in a study titled Creating Positive Forbearance Outcomes: “Unlike in 2008, strategic defaults have not emerged as a serious problem and seems unlikely to emerge given stronger expectations for property price increases, a record low inventory of homes, and stable residential underwriting standards leading up to the crisis which has reduced the number of owners who are underwater.” There Are Other Options That Were Not Available the Last Time A decade ago, there wasn’t a forbearance option, and most banks did not put in other programs, like modifications and short sales, until very late in the crisis. Today, homeowners have several options because banks understand the three fundamental differences in today’s real estate market as compared to 2008: 1. Most homeowners have substantial equity in their homes. 2. The real estate market has a shortage of listings for sale. In 2008, homes for sale flooded the market. 3. Prices are appreciating. In 2008, prices were depreciating dramatically. These differences allow banks to feel comfortable giving options to homeowners when exiting forbearance. Aspen Grove broke down some of these options in the study mentioned above:
What about Those Who Don’t Qualify for These Programs? Homeowners who can’t catch up on past payments and don’t qualify for the programs mentioned have two options: sell the house or let it go to foreclosure. Some experts think most will be forced to take the foreclosure route. However, an examination of the data shows that probably won’t be the case. A decade ago, homeowners had very little equity in their homes. Therefore, selling was not an option unless they were willing to tap into limited savings to cover the cost of selling, like real estate commission, closing costs, and attorney fees. Without any other option, many just decided to stay in the house until they were served a foreclosure notice. As mentioned above, today is different. Most homeowners now have a large amount of equity in their homes. They will most likely decide to sell their home and take that equity rather than wait for the bank to foreclose. In a separate report, Black Knight highlighted this issue: “In total, an estimated 172K loans are in forbearance, have missed three or more payments under their plans and have less than 10% equity in their homes.” In other words, of the millions currently in a forbearance plan, there are few that likely will become a foreclosure. Bottom Line Some analysts are talking about future foreclosures reaching 500,000 to over 1 million. With the options today’s homeowners have, that doesn’t seem likely. SOURCE KCM #DistressedProperty #Foreclosures #SimardRealtyGroup #eXpRealty About 3 in 4 millennials have hopes of buying a home within the next year, and with good reason – homeownership continues to be a top investment choice, and homes are more affordable today than they have been in years. Are you one of them? If so, it’s normal to feel uncertain about how to navigate the housing market right now. Low inventory and confusion about down payment requirements are a couple of obstacles you may be facing, but knowledge is the greatest way to get around them. If you’re hoping to buy a home soon, DM me so I can give you the information you need to move through the homebuying process with power and confidence.
#expertanswers #stayinformed #staycurrent #powerfuldecisions #confidentdecisions #realestate #homebuying #realestategoals #realestatetips #realestatelife #realestateagent #realestateexpert #realestateexperts #realestatetipsandadvice #keepingcurrentmatters The September Jobs Report issued by the Bureau of Labor Statistics reported that the unemployment rate dropped to 7.9%. Though that percentage is well below what experts projected earlier this year, it still means millions of people are without work. There’s no way to minimize the tremendous impact this pandemic-induced recession continues to have on many Americans.
However, the latest Home Purchase Sentiment Index from Fannie Mae shows how more and more Americans believe the worst is behind us, and their personal employment situation is good. The index revealed: “The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 78% to 83%, while the percentage who say they are concerned decreased from 22% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job increased 11 percentage points.” Americans Are Game-Changers Too Americans are naturally optimistic and have always responded to challenges with both resiliency and resourcefulness. Today is no different. As an example, the Wall Street Journal (WSJ) just reported: “Americans are starting new businesses at the fastest rate in more than a decade, according to government data, seizing on pent-up demand and new opportunities after the pandemic shut down and reshaped the economy.” Why would someone start a business in the middle of an economic crisis? The WSJ explains: “The jump may be one sign that the pandemic is speeding up ‘creative destruction,’ the concept…to describe how new, innovative businesses often displace older, less-efficient ones, buoying long-term prosperity.” The WSJ also notes that these new businesses will have a positive impact on the overall employment situation, as new businesses “are a critical engine of job creation. Startups have historically accounted for around one-fifth of job creation.” Bottom Line For the millions of Americans still unemployed, we hope for a quick return to the workforce. We should, however, realize that over 90% of people are still employed, and some are venturing into new business start-ups. Perhaps the next big game-changing company is right around the corner. SOURCE KCM #HousingMarketUpdates #ForSellers #ForBuyers #SimardRealtyGroup #eXpRealty The 2020 housing market has surpassed all expectations and continues to drive the nation’s economic recovery. The question is, will this positive trend continue throughout the rest of the year, especially given the uncertainty around the current health crisis, the upcoming election, and more?
Here’s a look at what several industry-leading experts have to say. Lawrence Yun, Chief Economist, National Association of Realtors “Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market…Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.” Frank Martell, President and CEO, CoreLogic “Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures…Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term.” Zillow “Zillow’s predictions for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand. The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of uncertainty including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook.” Bottom Line Many economists are in unison, indicating the housing market will continue to fuel the economy through the end of the year, maintaining this unprecedented strength. SOURCE KCM #Pricing #SellingandBuyingthis2020 #HousingMarketUpdate #SimardRealtyGroup #eXpRealty
Today's housing market is empowering homeowners with the control they want when selling their house, but as home inventory begins to rise, this fair weather won't last forever. Let's connect to start the process of selling your house now while it's still the best time to do so.
#TopGranbyRealtor #StephenSimard #ExpRealty #GranbyRealEstate #GranbyConnecticut #FindyourGranbyhome #Newhomesforsale #SimardRealtyGroup #Granbyhomesforsale #JoinExpRealty #Simsburyhomes Some Highlights
#FirstTimeHomeBuyers #For Buyers #Infographics #MoveUpBuyers As we spend more time at home this year, there’s an even greater focus on what we truly need in our daily lives. If you’re renting and your current house or apartment just doesn’t fit your lifestyle anymore, DM me to learn why this is the perfect time to invest in a home of your own.
#rentvsbuy #expertanswers #stayinformed #staycurrent #powerfuldecisions #confidentdecisions #realestate #homeownership #homebuying #realestatemarket #realestateexperts #instarealestate #realestatetipsoftheday #realestatetipsandadvice #keepingcurrentmatters Earlier this year when the nation pressed pause on the economy and unemployment rates jumped up significantly, many homeowners were immediately concerned about being able to pay their mortgages, and understandably so. To assist in this challenging time, two protection plans were put into place to help support those in need. First, there was a pause placed on initiating foreclosures for government-backed loans. This plan started on March 18, 2020, and it extends at least through December 31, 2020. Second, homeowners were able to obtain forbearance for up to 180 days, followed by a potential extension for up to another 180 days. This way, there is a relief period in which homeowners have the opportunity to halt payments on their mortgages for up to one year. Not Everyone Understands Their OptionsThe challenge, according to Matt Hulstein, Staff Attorney at non-profit Chicago Volunteer Legal Services, is, “A lot of homeowners aren’t aware of this option.” There’s definitely traction behind this statement. In a recent survey by The National Housing Resource Center, housing counselors from across the country noted that many homeowners really don’t know that there is help available. The following graph indicates the reasons why people who are in this challenging situation are not choosing to enter forbearance: The Urban Institute explained:
“530,000 homeowners who became delinquent after the pandemic began did not take advantage of forbearance, despite being eligible to ask for the plan…These responses reflect a need to provide better information to all homeowners. (Lump-sum payment is not the only repayment option.) Additionally, 205,000 homeowners who did not extend their forbearance after its term ended in June or July became delinquent on their loans. We need to examine who these people are and why are they not extending their option.” Clearly, a more focused effort on education about forbearance and relief programs may make a big difference for many people, and a clear understanding of their options is mission-critical. Some communities, however, have been impacted by the economic challenges of the pandemic more so than others, further confirming the need to deliver education more widely. The Urban Institute also indicates: “Black and Hispanic homeowners have been hit harder than white homeowners…nearly 21 percent of both Black and Hispanic homeowners missed or deferred the previous month’s mortgage payment, compared with 10 percent of white homeowners and about 13 percent of all homeowners with payments due.” Options Available It’s important to note that any homeowner experiencing financial hardship has the right to request forbearance. If you’re unfamiliar with the plans available, contact your mortgage provider (the company you send your mortgage payment to each month) to discuss your options. It is a necessary next step, as you may qualify for mortgage relief options or forbearance. One option many homeowners may not realize they have is the ability to sell their house in this time of need. With the growing equity that homeowners have available today, making a move might be the best option to protect your financial future. Bottom Line If you need additional information on your options, you can review the Protect Your Investment guide from the National Association of Realtors (NAR) and the Homeowner’s Guide to Success from the Consumer Financial Protection Bureau (CFPB). For the majority of people, our home is the most important asset we have, and you should use all the help available right now to be able to preserve your investment. SOURCE KCM #DistressedProperties #Foreclosures #Demographics #SimardRealtyGroup #eXpRealty |
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