As the country works through the changes precipitated by the coronavirus pandemic, experts say a significant housing market shift could be underway.
While it won’t fully solve the country’s overall shortage, researchers believe U.S. inventory could rise as much as 11% by the end of 2021. Housing inventory plummeted 50% between April 2020 and April 2021, as median home prices soared 17.2%.
Yes, homebuilders are beefing up new home inventories as best they can, but much of this presumed additional volume would be culled from existing stock – via the impending end of federal forbearance.
During the height of the health crisis, the federal government passed emergency rules allowing some 7.2 million homeowners to pause mortgage payments due to financial hardship.
Most have resumed payments since, but on Sept. 30, the government began phasing out the final 1.7 million participants. Many will receive further loan adjustments from their banks, and others may take advantage of others forms of federal relief. A significant number will likely face foreclosure, though bank action is unlikely to sink their financial futures this time around.
Unlike the economic wasteland after the Great Recession, today’s strong housing market means nearly all homeowners have earned positive home equity. They could likely sell, and then walk away without mortgage debt.
If even a percentage of these 1.7 million homes come on the market, it could prove a positive “shock” to the housing market. And of course, any foreclosures that do go through would eventually be added to the listing rolls, as well.
While a couple hundred thousand new listings in a nation with 80 million homes might not seem like many at first blush, consider there are just over 600,000 homes for sale right now.
Prices flattened in June and July, as inventory climbed 8.2% and 10.8%, respectively.
U.S. existing home sales were also up for the second consecutive month in July, increasing 2% to a seasonally adjusted annual rate of 5.99 million units. Home resales account for the bulk of U.S. home sales.
Don’t expect any influx to cause a price downturn: In the short term, a wave of demographics and years of under-building will ensure that demand outmatches supply.