I THINK IT’S TIME
WE START WORRYING ABOUT THE HOUSING MARKET AGAIN.
Kenneth Session A while back, Louis Hansen with the Mercury News wrote, “Housing economists and real estate professionals are pessimistic about the Bay Area in 2020 — but don’t expect a crash to bring saner prices or slower sales.” Little did he, or the experts knew what was in a store not just for the Bay Area, but for the whole country. Right now, I am not so sure about what the pandemic means for the entire country, but what I do know is, it might bring saner prices… or not. The sales of existing homes in February jumped 6.5% month-tomonth to a seasonally adjusted annualized rate of 5.77 million units, according to recent data by the National Association of Realtors. This is the highest jump in 13 years. While this year’s spring was looking way better, for all real estate stakeholders, it took a sharp turn as the economy shut down. The Northeast perhaps was the only region to see a decline, with the sales going down 4.1%, but the situation in the west was a different one. Despite prices being high, sales were up nearly 19%. “I would attribute that to the 56 l
incredibly low mortgage rates and the steady release of a sizable pent-up housing demand that was built over recent years,” wrote Lawrence Yun, chief economist for the NAR in a release.
HOUSING CRASH
crashes have been caused by asset bursts. And one of the signs of a potential bubble is the rapidly rising home prices. Prices for homes all over the country have been growing in the last decade, reaching an all-time high in Q1,2020 of $212,433. This was a 15% increase than the July 2006 record high of $184,613, according to the Case Shiller HPI. In a similar account, the S&P Homebuilder Select Industry Index has risen dramatically, rising by 250% from 1,372 on October 5, 2011, to 4,867 on February 12, 2020. Since then, it has been falling, reaching 2,486 in March 2020.
So, the big question is, should we be expecting a housing crash? If we go back in history, you will notice that most of the housing
The Housing Bellwether Barometer, which is an index for the homebuilders and mortgage companies, in 2017, it skyrocketed like it did back in 2004-05. Another factor that we should be concerned about is the increase in unregulated mortgage brokers. In 2018, these brokers originated 53.6% of the U.S. Mortgages. Additionally, 5 of the nation’s top 10 largest mortgage lenders are not banks and are not regulated by banks, which means, in the event
At the beginning of the crisis, real estate experts were quite optimistic about the housing markets. American too, while there were fears about a real estate market crash, the stock market crash worsened those fears, and now the question most people are asking, is housing next? The survey by NAR shows that about 90% of experts agree that the coronavirus pandemic has reduced the interest buyers had. Of those, about 60% are merely delaying buying a home just to see how the next few months will turn out to be, with also most 63% of the hopeful buyers expecting that the prices will go down.
THE POWER IS NOW MAGAZINE | APRIL 2020
