This permanent shift to working remotely is only going to put, value of homes. Additionally, many of these investors are looking for dividends, or some kind of cash flow. The nation’s median listing price per square foot also grew by 15.9% compared to last year, an acceleration from the 15.4% growth seen last month. Currently, FHFA projects additional expenses of $1.4 to $2 billion will be borne by the Enterprises due to the existing COVID-19 foreclosure moratorium and its extension. At some point, the bubble gets so big, it becomes out of reach for most people. The resulting pent up demand has driven homebuyers back to these markets, but now with an increasing preference for neighborhoods outside of the dense city centers and more toward suburban areas. A higher ratio indicates relatively more affordability. But knowing that the Fed’s benchmark rate is likely to stay at its current level of near zero for a long time — analysts say that could be several years — might give companies more confidence to invest and hire. The vacancy rate is somewhat analogous to the unemployment rate. https://www.investopedia.com/investing/next-housing-recession-2020-predicts-zillow/  In October, the median listing price held steady at the summer 2020 high of $350,000, resisting the usual seasonal decline for the first time in Realtor.com's recorded data history. At RealWealth, we bought 4,200 lots in the Tampa area during the Great Recession for ten cents on the dollar. The seasonally-adjusted estimate of new houses for sale at the end of December was 302,000. All regions experienced double-digit year-over-year increases. We could easily see the housing affordability index hit 200. Because even though prices rose quickly, so did salaries. Housing is affordable when the housing of an acceptable minimum standard can be obtained and retained leaving sufficient income to meet essential non-housing expenditure. However, hot economies eventually cool and with that, hot housing markets move more towards balance. People can now live where they only hoped to retire. In the meantime, 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. New single-family construction starts will fall slightly to 871,250 in 2020 before rising to 940,000 in 2021 and 975,000 in 2022, the highest level since 2006. It’s been on a tear since it doubled from $5 trillion to $10 trillion during the Bush presidency, and then doubled again from $10 to $20 trillion during the Obama presidency. The current moratoriums were set to expire on January 31, 2021. Listing prices in the nation’s largest metros grew by an average of 8.8% compared to last year, the same as last month. Essentially, the need to directly interact with humans to buy and sell a home won’t be as necessary. It will be beneficial to own assets that come with tax incentives, like business and real estate. With real estate, both the underlying asset and the rents tend to increase overtime. We can expect a wave of mortgage refinances to save money. The decline in homebuilder sentiment in January and the sharp drop in new home sales in November suggests that single-family starts may decelerate in the near-term from the current impressive pace. More homes being listed for sale in areas with wealthier demographics goes some way to explain the strength of the housing market at a time of recession and rising unemployment. That expansion was driven by negligent lending in the subprime mortgage market and the current housing boom is driven by the intense demand and record-low mortgage rates. The PCE price index increased 3.7 percent, in contrast to a decrease of 1.6 percent. This is causing the value of homes to rise faster in predominantly Hispanic neighborhoods than in predominantly white neighborhoods.Â. This further decreases inventory, which could drive prices up as supply diminishes while demand flourishes.Â, Plus, as more people discover they can live in more affordable areas as they work remotely, we will likely see an uptick in purchases in the suburbs, exurbs and even rural areas. Both region types appear to be hot sellers’ markets right now – while many suburban areas have seen a strong improvement in housing activity in recent months, so, too, have many urban areas. In the Midwest and South, properties now typically spend 13 fewer days on the market than last year, in northeastern markets the typical property spends 12 fewer days on the market, and in western metros, the typical property spends 11 fewer days on the market. In 2008 - at age 22 - he was recognized by The Times of London for warning about the U.S. housing and credit bubble as a university student via a website he built called "stock-market-crash… The only exception would be the “affordable” homes that are in short supply. If this plan comes to fruition, there would be further demand for housing. One thing we know for sure is that the economy, Top 4 Best Real Estate Markets in Indiana 2021, 13 Nationwide Housing Market Predictions for 2021, 4 Predictions for How Biden’s Presidency Will Impact the Housing Market, 11 More Housing Market Predictions for 2022-2025. The demand has not gotten significantly shorter since last May/June, and buyers and sellers are continuing to connect at a record pace. Let's first see how various consumer surveys are responding in wake of this crisis. People spend more on housing cost than on living costs. The median sales price of new houses sold in December 2020 was $355,900. Homeowners and investors who financed their property can count on rising inflation to eat away at their debt while the asset increases in value. The housing crash saw ratios fall. All or most home showings will be done using VR/AR technologies. By 2025, is predicting the Virtual Reality/Augmented Reality or VR/AR industry to be an $80 billion industry. It’s similar to any other index where you have a starting point or a starting year and you peg it at a hundred and it just goes up and down from there. Some areas around the country might see home values fall, stay flat, or boom. But suburbs had the lowest rental vacancy rate of 5.5 percent, 1.5 percentage points lower than principal cities. You might be shocked at what you can qualify for with today’s low rates. Although sellers are listing more & more homes we need more new home supply to add to inventory and slow these sharp price increases. What will 2021 be like for investors? But now that we have some idea of who will be president, we can expect things to calm down a bit. Sales volumes overall are forecasted to remain higher than pre-pandemic levels throughout this year and next. With many sellers remaining on the sideline and a decline in housing starts, inventory will remain constricted. The Federal Reserve has reassured that it will keep interest rates and its bond-buying program unchanged — downplaying any urgency to bring borrowing costs back up from their lowest levels in history at near zero. This kind of steady economic growth translates to new jobs.Â, Whenever there’s an increase in unemployment, there’s usually an uptick in foreclosures as well. According to … The forecasts 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. Buyers remain motivated but watchful of interest rates and frustrated by a shrinking inventory. The previous forecast predicted a 3.8% increase in home prices over this time frame. The way consumers buy and sell homes has already changed since the onset of the Coronavirus and we expect that trend to continue and advance. So, for now, we have a median price of $340,000 and a 30-year fixed mortgage rate of 2.860%. Boise ranks #1 for fastest year-over-year growth, with rents up by 12.4 percent. 😊. This was equal to roughly 200,000 homes being taken off the market. These iBuyers actually make offers on homes, buy those homes at a discount, sometimes fix them up, and then sell them to the public for a profit.Â. A good indicator of a housing market crash is a rise in the ratio of house price to average earnings. We can learn from the past to prepare for the future. The NAHB gets input from builders on how confident they are in the housing market based on buyer behavior, sales, and incorporates any forecasts as well. Many cities in Texas have seen increases in home values, and this trend is expected to continue in the coming years as jobs continue to migrate to the South. But that certainly won’t happen over the next few years. And by my estimation, the next housing crash is not a matter of “if”, but “when”. As I mentioned before, it comes down to supply and demand. An April Realtor.com survey found out that after spending many long weeks confined in their homes, consumers’ preferences shifted toward bigger homes and more outdoor space for their next homes. Tight housing inventory was the issue for buyers before Covid-19 as well. Let us discuss in detail the various housing indices & their predictions for 2021 & 2022. The purpose of these policies and initiatives is to give minorities more housing opportunities when they may have been previously discriminated against.Â. As prices keep climbing month-over-month, it just shows the resilience of the US housing market in the face of an ongoing economic recession. I knew this kind of easy, careless lending was creating a bubble that would pop when those loans were due. The mean perceived probability of losing one's job in the next 12 months increased slightly from 14.6% in November to 15.0% in December, remaining slightly below its December 2019 level of 15.4%. Fannie Mae predicts 40% more mortgage refinances in 2020 than in 2019. We could see the following changes to the real estate market over the next four-plus years under the Biden administration.Â, The housing plan is also hoping to expand on the. The federal government’s shutdown of so-called non-essential businesses put a hold on most real estate transactions. Another factor affecting this equation is the rising average price of new homes. If George, Harrison, and Foldvary are right, however, that won’t happen until after the … With the lack of inventory on the market, distressed homeowners can try to sell their property at full market value, instead of losing all the equity they’ve built. A low supply in the housing market coupled with low interest rates could be the biggest factor for increasing housing prices. The West and Northeast regions haven’t been on the same trend line for rent prices in recent comparisons — until now. According to RealtyTrac's October 2020 U.S. Foreclosure Market Report, there were a total of 11,673 U.S. properties with foreclosure filings — default notices, scheduled auctions, or bank repossessions — in October 2020, up 20 percent from a month ago but down 79 percent from a year ago. https://www.daveramsey.com/blog/real-estate-trends Social-distancing requirements are also likely to hold construction back in the coming months. Borrowers can request an additional six months if needed. They are now ready and willing to invest those funds into something that feels more certain amidst so much uncertainty. For now, there are no indications that price growth is going to slow. More and more employers are on board with this policy because they are learning it hasn’t negatively affected productivity.  In fact, working from home can be more efficient because employees spend less time in traffic and are sick less often from sharing office space with those who don’t want to take a sick day. Still, there will be some businesses that do not survive this crisis and workers who will remain unemployed. The resources needed to build a subdivision are not always available, like water rights and access to power and sewer. It’s free and signing up takes less than 5 minutes. In fact, it continues to play an important supportive role in the country’s economic recovery. According to N.A.R,'s recent forecast, for all of 2020, existing-home sales are expected to increase by 1.1% compared to 2019, with sales ramping up to 5.4 million by the fourth quarter. The median existing single-family home price was $315,500 in November, up 15.1% from November 2019. Â. New home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be up – even after missing the spring buying season due to the pandemic lockdown. Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property.  His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate.  He’s also the host of the top-rated podcast – Passive Real Estate Investing. This is important since half of all home mortgages are given to Millennials. The Fed is willing to accept a low yield, which in turn keeps interest rates low. All major regions either took a step back or held steady in terms of their respective month-over-month status, but each of the four areas experienced significant year-over-year growth. Assume that builders and sellers had met buyer demand, keeping prices flat over the year. In the 50 largest U.S. metros, the typical home spent 56 days on the market, and homes spent 12 days less on the market, on average, compared to last December. And as more and more evidence shows that home prices are rising, not falling, and that the supply of housing is shrinking, not growing, lenders have begun to relax.Â, Of course, the influx of trillions of dollars of new money also helped. An estimated 811,000 new homes were sold in 2020. The idea behind imposing these tariffs came from Trump’s belief that international trade was unfair to America, and that it was time to return to the manufacturing of products here in the U.S.Â, The coronavirus proved this to be true when the U.S. ran out of important medical supplies that we would normally import from India or China.Â, While tariffs are meant to punish China, they also hurt American consumers who have to pay more for those imports.  These tariffs have increased the cost of some building materials, which in turn, have driven up the cost to build even further.Â. Their national index ticked up by 0.1% from December to January, the first monthly increase since last August. This money is designed to assist individuals and families who may not qualify for the Section 8 voucher but are still struggling to cover rent.Â, An analysis of mortgage rates from 2018 to 2019 showed that interest rates were 13 basis points higher in predominantly black communities compared to predominantly white communities. With President-elect Biden entering the White House this January, some experts are predicting slightly higher interest rates over the next few years.Â, reported that the bulk of new homebuyers are now Hispanic Americans. The December national median listing price was $340,000, up 13.4% compared to last year. But we can look at some of the factors that might contribute to a 2021 housing crash. The chief economist of the Mortgage Bankers Association expects 3% GDP growth in 2021, 2% in 2022 and 1.9% in 2023. Those interested in purchasing homes are looking at the enticing low mortgage rates. Specifically, the demographic trends showed strong migration to the Southeast of the United States. It can start growing when there’s a lot of demand, coupled with the ability to buy. The foreclosure backlog comprises three types of loans — loans that were in foreclosure before the government's moratoria; loans that would have defaulted under normal circumstances; and loans that would default due to job losses induced by the pandemic. The latest housing market trends show that prices are rising in most parts of the country and most price segments because of the lack of supply. Become a member of RealWealth. ], : In this ultimate guide to the housing market, expert real estate investor, Kathy Fettke, shares over 28 housing market predictions for the years 2021, 2022, 2023, 2024 and 2025. Strong growth is expected in 2021 for housing sales, rents, and home prices. A rising index reveals that lenders are loosening their credit standards. As you read further, we have collected some data from credible sources that show how the US housing market is recovering week after week from the blows of the pandemic.Â. A study by HUD showed that. You may just wait a few months or even a year so that prices will flatten (or come down). https://www.nar.realtor/research-and-statistics/housing-statistics/ This is the largest demographic in the world. The homeownership rate of 67.9 percent was 3.8 percentage points higher than the rate in the second quarter of 2019 (64.1 percent) and 2.6 percentage points higher than the rate in the first quarter of 2020 (65.3 percent). After that, it fell sharply by 14.1 points and reached below the pre-COVID benchmark on Jan 2, 2021. When the yield increases, so does the cost of borrowing money, generally, because the same inventors that buy treasuries also buy mortgage-backed securities.Â, In times like now, when there are fewer buyers for those treasuries, the Federal Reserve steps in as the Buyer of Last Resort. Prices begin to drop, and the air is slowly or very quickly let out of the bubble.Â. To put it simply, the US housing market is ripe for investment in 2020, making it a great time to buy a rental property for sale to increase your cash flow. Homes continued to sell almost two weeks more quickly than last year. The pace of existing-home sales has jumped to a level not seen since 2006 and, importantly, was followed by strong pending sales, purchase mortgage applications, and construction data. This is one of the more certain housing market predictions. The national 1-bedroom median and 2-bedroom median grew 0.3% and -0.1% at a monthly rate, respectively. Not only are people happy to exit big, expensive cities, they’re also interested in moving into single family homes that provide more space. People still want to own homes, and with mortgage rates low, a lot of people are taking advantage of that even though there is an apparent economic slump. An increasing affordability index means more people are priced out of the housing market. The following is a tabulated summary of the National Listing Price Trends from March 2020 to December 2020 on Realtor.com. To afford a typical mortgage payment, a given family needs to spend no more than 25% of income on its mortgage payment (for a 30-year fixed-rate mortgage with a 20% down payment). The program is meant to help build communities that have been neglected and underfunded, as well as offer an affordable option for housing to public service workers. Projects a significant demand for housing for young adults over next 10 years, with an estimated 15,000 households under age 35 coming to the county by 2025. It intends to keep the interest rates at rock bottom for even longer than previously expected after a major policy shift that has profound implications for Wall Street, workers, and savers. First-time homebuyers may receive a tax credit of up to $15,000 for the down payment of a home. A year ago, the 30-year fixed-rate, was 3.70 percent, so you would have paid $460 each month for the same amount. It won't just ease down or “retrench.” It will crash. Robots will find their way into our lives in many ways over the coming decade. The decline in second-quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. She also answers one of the biggest questions investors ask every year: Will the housing market crash? On the flip side, North Dakota also saw home prices soar because the oil industry was booming at that same time. According to the National Association of Realtors®, overall sales decreased year-over-year, down 17.2% (4.33 million units in April 2020) from a year ago (5.23 million in April 2019). The outbreak of the novel coronavirus might be the thorn that makes this bubble pop. While demand for housing remains red hot, supply-side constraints that have hindered homebuilders for years have recently become even more acute. The rate is now 13.3%. Home values in Austin grew 5.3% in the past quarter, while home values grew 5.1% over the same period in Phoenix, San Diego, and Salt Lake City. Imagine if you got a  30 year fixed rate mortgage 20 years ago. This combination of high demand and low supply has driven prices higher in the suburbs. Big bull markets like this end with a bang, not a whimper. Owning a home in a flood or fire zone will be a lot more expensive in the coming years. However, these prices were 15 percent cheaper than their surrounding metros, on average, and essentially right in line with the national median price of $331,000 during the same period. The rising home prices were just a “new normal” for the area. It is influenced by the balance between housing supply and demand, the labor market, and mortgage rates by way of Federal monetary policy. Tight inventory coupled with rising mortgage rates would have lead to dropping sales. The Dow Jones hit a new record high on that news, reaching the 30,000 milestone. 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. For the first time since April 2020, rental prices are increasing at a monthly rate in San Francisco after months of decline in the city and throughout the entire Bay Area. ATTOM Data Solutions, licensor of the nation's most comprehensive foreclosure data released its Year-End 2020 U.S. Foreclosure Market Report. The median existing condo price was $271,400 in November, an increase of 9.5% from a year ago. Affordable housing just wasn’t profitable enough, especially in 2nd and 3rd tier cities.Â. With 10 years having now passed since the Great Recession, the U.S. has been on the longest period of continued economic expansion on record. But more recently, job openings appear to have stalled, and other statistics indicated that the labor market remains in the grips of recession. Inventory was predicted to remain constrained, especially at the entry-level price segment. We can, however, expect major changes over the next 5 years as technology evolves.Â, Robots will take more jobs than Covid, so educating people on new technologies will be of high priority. Rounding out the top 10 states with the highest foreclosure rates were Florida (0.23 percent); Connecticut (0.22 percent); Ohio (0.21 percent); Georgia (0.19 percent); and Indiana (0.18 percent). The Federal Housing Finance Agency (FHFA) announced on May 13 that Fannie Mae and Freddie Mac (the Enterprises) are making available a new payment deferral option. It’s also why we spend so much time at RealWealth educating people on the importance of acquiring real estate – and that through leverage, anyone can do it. It shows that the pool of active buyers has continued to grow but at a visibly slower rate than observed in the fall. Before the coronavirus pandemic began, the U.S. housing market was already short from the supply side. Even before the pandemic, the number of renters was increasing. The year 2020 has been unstable, to say … As a buy and hold real estate investor and developer, we have to be able to see beyond one year.Â, Unemployment rates will continue to improve, There will be a slight uptick in mortgage defaults, There will be a permanent shift working remotely, There will be more government spending and increased national debt, People will continue to invest in more stable, cash flowing assets, Consumers will leave big cities to buy or rent new homes, Home prices will continue rising, especially in the affordable range, Political certainty will calm the real estate market. The housing market has been along for much of the ride and continues to benefit greatly from the overall health of the economy. The combination of intense demand and the low mortgage rates has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers. “, “While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” said NAHB Chief Economist Robert Dietz. Learn more about Kathy’s story here. In March, the unsold inventory was equal to a 3.4-month supply at the current sales pace, up from three months in February and down from the 3.8-month figure (from a year ago). They are likely to hold up even if there is a decline in transaction activity in the coming months. Demand is high due to the coronavirus driving people out of cities, condos and apartments. Economic activities are ramping up in all the sectors, mortgage rates trend at historic lows, and jobs are also recovering. Additionally, hospital workers understand how to treat the virus much better now than they did 6 months ago. Nationally, the typical home spent 66 days on the market in December, 13 days less than the same time last year. Experts think that the economic cost we’ve paid to try to contain the virus will weigh down the economy into 2021. In the first quarter of 2020, the housing price index (HPI) ranked the Florida real estate market no. The economy is expected to shrink by 6.5% this year, in line with other forecasts, before expanding 5% in 2021. In the second quarter, GDP decreased 32.8 percent, or $2.04 trillion (tables 1 and 3). This year alone, the government issued trillions of dollars in aid for businesses and those who became unemployed due to the Coronavirus. And if so, when?Â, I’ve been helping new and experienced investors purchase cash flowing real estate nationwide for almost two decades now. She is passionate about researching and then sharing the most important information about real estate, market cycles and the economy. That’s why the divide between the haves and the have nots continues to grow. This allowed us to hire the best people for the job, not just someone who lived nearby. However, all three of these markets have seen the rate of decline improve compared to last month. Austin (+20.0%), Riverside-San Bernardino (17.2%), and New Orleans (+16.8%) posted the highest year-over-year median list price growth in December. That’s why timing is very important, because you don’t want to be a buyer in a strong seller’s market or a seller in a strong buyer’s market. However, at times of uncertainty, people tend to spend more conservatively and save their money. Median expected household income growth increased by 0.1 percentage point to 2.2% in December. And that will worsen the housing affordability index as long as the economic crisis continues.