Real Estate Rundown by Moving Leads | May 2021
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Housing Market Projections - May 2021 - 2022
One burning question is how the country is going to recover as it slowly opens back up. Zillow recaps some emerging trends for the year that may start to paint a picture of what the road to recovery will look like.
Right out of the gate, it looks like it is going to be a rocky one. The number of April jobs added fell grossly short of the forecasts. Only 266,000 jobs were adding in April with the forecasts being closer to 1 million. Although in a normal year this number would be phenomenal, the number needs to be much higher to recover at a faster rate and make up for the 8.2 million jobs still needed in order to get back to the numbers of jobs we had before the pandemic. Linked with the disappointing jobs reports, the mortgage rates have also gone back down to the low levels we saw in February.
Although on May 5th a federal judge has struck down a national eviction moratorium which will raise protections put in place for renters that cannot afford rent, reports show forbearance stats are improving. According to Black Knight, 2.2 million loans (4.2% of total) were in forbearance in the week ending May 4, 105,000 fewer than the previous week.
Home Buying Institute (HBI) notes a trending question they have been fielding from their readers - Is the U.S. housing market likely to crash in 2022? They preface answering the question with - there is no way for anyone to know for certain, the market and economy can be so unpredictable. They did however note various trends indicate a crash in 2022 is very unlikely.
The main trend that they indicate is a signal towards an unlikely market crash in 2022 is the supply and demand imbalance. HBI also notes home prices will rise more slowly than they have been. These are the trends we see with a real estate market crash. There is a steep increase in home prices with strong buyer demand. This leads to speculation if demand will continue. This speculation leads to builders increasing production to compensate for the high demand. Then demand declines and the supply continues to rise and then we see a steep drop in home values.
They explain this is not where we are in 2021. Even though our inventory is very low and demand is very high due to low mortgage rates, and a few other factors, the current supply situation we are seeing does not look like it would lead up to a crash. We currently have too little supply vs. the too much supply to the demand scenario we see leading to a market crash.
New First-Time Homeowner Tax Credit Now a Bill
Congress recently put new legislation in place the $15,000 tax credit for first-time homebuyers that President Joe Biden requested. This new legislation is called the “First-Time Homebuyer Act”.
This tax credit is only for first-time homebuyers for up to 10% of their home purchase price or up to $15,000. It is intended for low and middle-income earners, and applicants must follow strict guidelines to be eligible. It is not like another piece of legislation that Congress is working on that gives first-time, first-generation homebuyers down payment assistance.
This new tax credit bill is causing waves in the affordable and urban housing community. The hope is it will address and combat the housing affordability crisis, and particularly close gaps between white communities and communities of color. A boost in these communities will help improve the overall economy of areas directly impacted, the ones surrounding them, and on an even larger national scale. Similar bills in the past during the 2008 recession produced great results for communities and helped rebuild the national economy.
The ultimate goal of this bill is to help build communities facing systemic exclusions in the housing market. According to Marcia Fudge, the leader of the Department of Housing and Urban Development, “The gulf between Black and white homeownership is greater today than it was in 1968 when banks “could still legally discriminate against borrowers based on the color of their skin,”
Pandemic Migration Patterns Analysis
Although there is a pattern of more people leaving major metro areas (particularly New York and San Francisco) during the pandemic, experts are now noting the migration patterns have stayed pretty consistent with existing migration patterns pre-pandemic. So although the number of people migrating has spiked, the existing places that attracted these nomads before the pandemic are still drawing them in. The original projections of the “spread” to smaller metro areas and “down-and-out” locations forecasted by experts earlier in the pandemic seem to be inaccurate.
Here are some trends that experts are noting have shifted with the pandemic, but may not be due to the pandemic. First, small metros with oil-industry employment saw a large exodus due to the decline in the energy sector, not due to COVID. This second trend is likely to be due to COVID - the movement to smaller metros around New York City. And finally, there was a rise in migration to vacation areas i.e. Cape Cod, areas of Florida, etc.
But even if the pandemic didn’t upend migration patterns, some pandemic-era shifts could endure. And local labor markets around cities like New York and San Francisco could stretch to include more peripheral towns — satellite communities from which a daily commute wouldn’t make sense, but a once-a-week drive might.
Please note the data summarized from this article is from the Postal Service, which sometimes does not show the whole picture. They rely heavily on people filling out a change of address form and a lot of people moving/migrating do not do that.
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Categories: Real Estate News