Local Records Office in Bellflower, California is on the onset of the COVID-19 pandemic has definitely played a part in the US housing market. The question is, where will the market go from here? How will it look in the end months of 2020 and the beginning of 2021?
Before the virus hit the US with its full force, the market was quite healthy. The supply of homes was low, but the demand was only getting higher as many millennials and other families were looking to move into homes of their own. Back in February, home sales were as high as they have been across the US since 2007. The buyer’s market has been strong across the US, with the only lighter markets being in Louisiana and North Dakota. The seller’s market, however, has only been considered particularly strong in Wyoming and Alaska. Others, like Florida, Arizona, Texas, and Kentucky have all had stable seller’s markets.
Looking to the future, it is hard to see an immediate recovery like the one that the stock market went through back in March and April. Because of the… questionable effectiveness that the US has had in containing the COVID virus, it seems that it will be taking a toll on people for a while. That means that businesses will be slower to open, unemployment will be slower to fall and people will have less money to put into buying and selling on the housing market.
Historically, people do not like to sell in the winter months. The only question is whether or not that trend will continue this year. On one hand, it seems likely because people will want to make up for lost time. On the other hand, cold months do not usually make for the best times to sell or buy.
One of the possible aspects to look forward to in the coming months is an initial rebound that looks like a recovery. People will want to get out and get back into the housing market after the shutdowns caused by the virus. However, the demand that follows would most likely not be able to keep up with that initial rush. This will lead to a market that resembles a W much more than it would a V or U. The initial dip was such a period of uncertainty, that initial dip will most likely be the deeper of the two. The second dip will most likely be much lighter.
Another of the largest aspects to keep in mind when monitoring the upcoming housing market is how the moratorium on foreclosures is going to affect it. These moratoriums were made to prevent the bottom from falling out of the housing market in a manner akin to the one in 2008, yet it might have some unintended consequences. Many of those who are renting apartments are still building up rent and once that moratorium expires on August 31st, all of that rent will be due at once. This could lead to a wave of homelessness playing its own part in how the housing market will be able to recover.
In terms of the general prices of homes in the US and the direction that they are headed in, it is likely that they will continue to grow. Perhaps not as they were before, as that growth was incredible, but it does seem like they will continue. By the end of next year, some are predicting that the growth will pick up again, perhaps even growing between 4-6%. The low mortgage rates are looking like they will continue thanks to the efforts of the federal government continuing to try and stimulate the economy at any cost.
The worst-case scenario looks to be if the COVID outbreak is not dealt with over the coming months. If conditions continue to spiral downwards and states have a continuous cycle of opening and closing in order to contain the virus, that will lead to more economic chaos. Prices would tank, the foreclosure suspension lifts, and those foreclosures that have been put off skyrocket and the situation start looking extremely similar to that of 2007. Some see this as an unlikely situation, but it must be acknowledged as a possibility. Especially as the record numbers continue to come out of Florida, Texas, and the other stable seller states. As they continue to be hit harder and harder with the virus, the entire economies of those states will suffer.
On the other hand, homeowners who are looking to flip houses or those who find themselves in valued areas could find themselves in quite a valuable position as we approach the end of 2020 and the beginning of 2021. Bargain hunters who are looking to flip suburban regions are also looking to be in a good position moving forward.
While house prices will seem to flatten in the immediate future, this might act as an opportunity for those who can spot the potential of valuable properties and buy them before they are snapped up by others. In terms of the overall markets across the US, those in the northeastern states like New York seem to be in a better position. They have slowed and even contained COVID, is poised to take advantage of opening sooner than the rest of the country.
The home market can be unpredictable in the best of times. With the continued spread of COVID-19 and the people’s reaction to it, the progression of the market that we have seen for the past few years is certainly in question. It seems most likely that the market will recover in a W-shape instead of the V that many are hoping for. Another key likelihood of the market for the coming months (if the virus containment continues how it currently does) is that both buyers and sellers will continue to be hesitant. Depending on how quickly and effectively the virus is dealt with and how limited its impact on the economy, the housing market will likely follow a similar pattern. Whether that is for better or worse, we can only wait and see.