The National Association of Realtors, or NAR, recently published its forecast for 2021. The headline? 2021 Could Be Real Estate's Best Winter Ever.
Wow! Think back to when the pandemic first started. Did you panic at all? I know we did! We never would've predicted that the housing market would defy high unemployment and an economic recession -- that it would thrive. But it did, and it continues to do so. Record low mortgage rates and a desire for larger homes outside of the city have pushed buyers out into the market, and we haven't slowed down. At all.
Back in March and April, a lot of buyers were telling us they were looking to scoop up deals because they were predicting a housing market crash. We explained that all signs were pointing to this situation NOT happening. And while the pandemic continues to rage on and many people struggle financially, we will NOT see the subprime bust we saw back in 2008.
Here are 3 reasons why:
1. Let's say there is a wave of foreclosures. Inventory is so low, a foreclosure would likely sell quickly, so prices will not decline. The market will not be affected AT ALL like it was during the housing bust because there was a 10 month supply of homes then, and now we are under a 3 month supply. It is a solid seller's market, and inventory is so low, we could use more homes for sale to balance things out.
2. Another issue we had back in the early 2000s we DON"T have now is lack of equity. Back then, prices were rising, AND people were financing 100% of their loans, in some cases 103%. For starters, lenders don't do those kinds of loans anymore. Moreover, prices aren't increasing at the rate they were back then, and, as stated before, there are more buyers than houses right now.
3. Many Americans haven’t had financial difficulty because of stimulus checks, small business loans, and unemployment insurance. Americans have still been able to save their money.
NAR's chief economist Lawrence Yun predicts that when there is a vaccine, and we are getting so close, we could see unleashed spending in the economy.