In June, employment in leisure and hospitality rose sharply. Under normal market conditions, prices would be expected to skyrocket as inventory declines at a faster rate, but buyer demand is expected to see-saw as the fourth wave of coronavirus pandemic pop-ups in winters. The housing supply will need to carry consistent momentum forward to balance the relentless growth in demand. Their forecast suggests that closed home sales reached a recent high in September, and will temporarily slow down in the coming months, falling to pre-pandemic levels by January 2021. A reading over 50 indicates that more builders view sales conditions as good compared with those who view them as poor. On the other hand, in a market in which there's a scarcity of vacant homes or apartments, the power dynamic is reversed. Capital Economics’ recent housing market predictions are that new and existing home sales will fall back over the remainder of the year. "The CoreLogic Home Price Index registered a 4.3% annual rise in prices through June, which supported an increase in home equity," Frank Nothaft, chief economist, said in a press release. The price index for gross domestic purchases increased by 3.4 percent in the third quarter, in contrast to a decrease of 1.4 percent in the second quarter (table 4). The 1-bedroom median and 2-bedroom median were down 15.0% and 17.1% from last year, respectively. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type, and average rental price. The total active listings were down 39 percent after five steady weeks at 38 percent. Imports, a subtraction in the calculation of GDP, increased. Let's first see how consumer surveys are responding in wake of this crisis. The only exception would be the “affordable” homes that are in short supply. The third-quarter increase in real GDP reflected increases in consumer spending, inventory investment, exports, business investment, and housing investment that were partially offset by a decrease in government spending. A higher ratio indicates relatively more affordability. For now, the ‘listing price’ growth and ‘pace of sales’ indices remained unchanged this week, but these measures tend to lag. Before the pandemic hit the nation the supply of new housing was failing to keep up with demand. https://www.realtor.com/research/may-2020-data/ With supply-constrained and demand boosted, house prices seem to rest on solid foundations in the pandemic. That was a nearly one percent increase from the prior month and an eight percent increase from a year before. Yearly declines in newly listed inventory have slowed and listing prices have recovered after reaching their low point during mid-April. The housing market has been along for much of the ride and continues to benefit greatly from the overall health of the economy. Powered by - Designed with the Hueman theme. The pandemic led to record-high prices, short supply, and economic uncertainty but despite all of that the buyer demand remained very strong. In year-to-date terms, the 1-bedroom median was flat and the 2-bedroom median increased 0.3%. The experts predicted that monetary policy will be the deciding factor this time around. Homes are being sold at an increasingly fast pace when compared to the previous year. Borrowers can request an additional six months if needed. The existing-home sales marked a three-month decline in sales (March to May) as a result of the coronavirus outbreak. Historically, low-interest rates are also an inducement to buy homes, but slow supply growth continues to result in high levels of home price appreciation, which is offsetting some of the affordability benefits of the lower rate environment, according to the Fannie Mae Economic and Strategic Research (ESR) Group. That means refinancing could be a smart option for your pocketbook. The housing sales are predicted to recover at a faster rate in this quarter. This is 9.3 points above the January baseline. However, the current trends show that the lineup of buyers has not gotten significantly shorter since May. Pending home sales experienced a minor decline in September after four consecutive months of contract activity growth, according to the National Association of Realtors®. That’s compared to the original housing market forecast of a decline of 1.8 percent in home sales. This would be the lowest rate since 1991. What will 2020 & 2021 be like for sellers? In Michigan, the agency estimates wage and salary employment growth will fall by 10.2 percent in 2020 and increase 6.9 percent in 2021. The housing supply index, which measures the growth of new listings, also fell for the second week in a row, to 95.9, down 2.7 points over the prior week. Oakland, CA was the 5th priciest rental market with the 1-bedroom median decreasing 5.2% from the prior month to $2020, and the 2-bedroom median decreased 2.6% from the prior month to $2630. Three of four regional indices recorded decreases in contract activity on a month-over-month basis in September. The forecast for the trend in the Grand Rapids housing market for the 3 years ending with the 3rd Quarter of 2021 is up. Home prices across Canada could tumble about seven per cent in 2021, as unemployment dampens the hot real estate market, according to a forecast by Moody's Analytics, Inc. The rate is now 13.3%. The Census Bureau reports rental vacancy and homeownership vacancy rates each year through its American Community Survey; you can get these at the city level or in some cases for even more fine-grained areas. The median U.S. rent stood at $1,771 in August, down 0.3% from July, the largest monthly decrease since September 2017, according to the real estate website Zillow. For the US, at the 5% down-payment threshold, the qualifying income amount for the second quarter of 2020 was $58,613. Therefore, housing units are still in short supply with unsold inventory sitting at a 2.7-month supply at the current sales pace. Existing-home sales continued to climb in September 2020, marking the fourth consecutive months of positive sales gains, according to the National Association of Realtors®. Growth is then expected to resume next spring and to remain firmly above pre-pandemic volume through most of next year. Michigan Home Buyers… Need A Little Help With That? Although the demand has softened a bit as compared to previous weeks but is nowhere to close to a level where you can imagine the balance real estate market conditions. We cannot expect the new listings to improve under such conditions. Housing market predictions that take Covid-19 into account have already come out. This is a 1.2 percentage point, or 141,583 household decrease from the share who paid rent through October 27, 2019, and compares to 92.2 percent that had paid by September 27, 2020. The good thing, at least for buyers and investors alike, is that house prices have nearly flattened and are poised to remain stable in the latter half of this year. It went up for most of the month of March, and then it hit this peak and came down rapidly and fast over the course of essentially the end of March, April, and right through to the beginning of May where it bottomed out. The 1 and 2-bedroom medians dropped 12.6% and 8.5% from last year, respectively. In the week ending November 7, the housing supply component, which tracks the growth of new listings, has continued to decline, for the second week in a row, to 95.9, down 2.7 points over the prior week, and 4.1 points below the January baseline. Single-family home sales sat at a seasonally-adjusted annual rate of 5.87 million in September, up 9.7% from 5.35 million in August, and up 21.8% from one year ago. New properties listed for sale were down 12 percent marking the second week of larger declines. Existing condominium and co-op sales were recorded at a seasonally-adjusted annual rate of 670,000 units in September, up 6.3% from August and up 13.6% from one year ago. New single-family construction starts will fall slightly to 871,250 in 2020 before rising to 940,000 in 2021 and 975,000 in 2022, the highest level since 2006. Disposable personal income decreased $636.7 billion, or 13.2 percent, in the third quarter, in contrast to an increase of $1.60 trillion, or 44.3 percent, in the second quarter. In contrast, year-ahead household income expectations remain weak compared with the pre-COVID-19 period. With the supply of available homes continuing to balance, and the entry-level demand is expected to remain strong. U.S. housing market expansion to continue in 2021, Realtor economist forecasts The median house price will rise 3% in 2021 and sales will jump 9% … The most commonly used indicator in the US and many other countries is the ratio of house prices to incomes or earnings. These big cities are losing demand because people are having a hard time finding jobs during the pandemic and are forced to move back in with their families. Only Buffalo, NY saw time on the market increase compared to last year (+7 days). Grim Foreclosure Predictions for 2021: What You Can Do Now Anywhere from about 225,000 to 500,000 homeowners across the country could face possible foreclosure throughout the rest of 2021 … Will sellers choose to go against the usual seasonal decline in new listings? With rates at or near historic lows, refinancing could help you save by reducing your monthly payments and reducing the total amount of interest that you pay over the life of the loan. The volume of new listings has also been trending lower over the past couple of weeks, as sellers across the country are reluctant to list amid the rising cases of coronavirus. Three of the six HPSI components increased month over month, with consumers reporting a substantially more optimistic view of home-selling conditions, expected home price growth, and the labor market, but a more pessimistic view of homebuying conditions and mortgage rate expectations. Mortgage Rates. Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020, as efforts continued to reopen businesses and resume activities that were postponed or restricted due to COVID-19, according to the “advance estimate” released by the Bureau of Economic Analysis. Realtor.com's forecast and housing market predictions on key trends that will shape the year ahead. The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic period. The payment deferral option allows borrowers, who can return to making their normal monthly mortgage payment, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity. The housing demand is still very high but its rate of increase is expected to slow down in the coming few months before it surges back in the Spring of 2021. The national median sales price of existing single-family homes was up 4.2 percent in Q2 2020 to $291,300 and up 5.9 percent to $280,200 based on the Trailing Twelve Month (TTM) average of quarterly median prices according to the National of Association of Realtors® (NAR). Still, the overall amount remains high. In late August, a brief surge of new listings almost brought numbers up to 2019 levels, but that pace dropped off again in September & October, contributing to the ever-deepening drought of overall active listings. Homebuilders were already prioritizing luxury homes over affordable and/or starter homes. US housing market predictions for the longer term will depend on the lingering impact of this virus. Good job. The 2-bedroom median rent dropped 4.3% to $2680. Rental concessions on Zillow listings are now nearly twice as common as they were in February, as landlords strive to attract new tenants in a rental market that has softened considerably since the coronavirus pandemic took hold. All of this shows that with the opening of up U.S economy, the key housing indicators have begun to turn around. For the year 2021, Yun projects existing-home sales to reach 5.86 million, supported by an economy that he expects to expand by 4% and a low-interest-rate environment, with a 30-year mortgage rate average of 3.2%. The sales growth amounted to an annual rate of 6.54 million – up 9.4% from the prior month and nearly 21% from one year ago. If you qualify for a mortgage, you have a more limited selection and prices close to what they were before the coronavirus hit, but you have relatively little competition. The homeownership rates in the Midwest, South, and West were higher than the rates in the third quarter of 2019, while the rate in the Northeast was not statistically different. It is rare to find somone who really knows their stuff. Now, we are not sure whether sellers would continue to list the properties in the winter season or back out once again due to the rise in coronavirus cases and the coming festive holidays. While demand saw a softening these past three weeks, it continues to remain very elevated. Both the 1-bedroom and 2-bedroom medians were down about 21% from last year. ATTOM reported that foreclosures increased by 20% in October. Market Watch. 2 Home Seller True Stories That Will Shock You! This ($859 mortgage payment) is about 13% of the median family income of $78,500, down from about 16% one year ago. The decline came as Americans turned their attention to the 2020 elections. All-cash sales accounted for 18% of transactions in September, unchanged from August but up from 17% in September 2019. https://www.washingtonpost.com/business/2020/04/16/unemployment-claims-coronavirus/, Filed Under: Housing Market Tagged With: Housing Market, interest rates, Investment Property, Real Estate Investing. The income that is needed for this scenario decreased to $47,760, down from $50,304 one year ago. Grand Rapids Housing Market Forecast 2019 – 2021. Record-low mortgage rates are likely to remain in place for the rest of the year, and all the Fed’s policymakers foresee no rate hike through 2022. This week’s demand-supply imbalance continued to shorten, as the housing demand index fell for the third consecutive week to 113.3, down 6.5 points over the prior week. The movement in this week’s index is therefore more attributed to strength in new listings at the same time last year rather than a decline in new listings this past week. In response to the COVID-19 national emergency, borrowers with financial hardship due to the pandemic have been able to receive forbearance, which is a pause or reduction in their monthly mortgage payment. https://www.statista.com/statistics/226144/us-existing-home-sales/ The price of the typical home for sale remains unchanged at $350,000. It had crossed the January baseline for the first time since early August. Thinking of making a move? Seasonally adjusted home prices are expected to increase by 1.2% from August to November and rise 4.8% between August 2020 and August 2021. In the third quarter of 2020, the national vacancy rates were 6.4 percent for rental housing and 0.9 percent for homeowner housing. Hays Regional Economic Outlook Conference Presentation "2021 Kansas Housing Markets Forecast" - October 22, 2020. Months of double-digit price growth and record level inventory may finally be translating into buyer fatigue. The national housing affordability index was 170.0 for February 2020. Sales trends show that the fall housing market that is still more active than normal, in which buyers continue to face strong competition. Housing market predictions for 2021 review. The NAHB gets input from builders on how confident they are in the housing market based on buyer behavior, sales, and incorporates any forecasts as well. Sales volumes overall are forecasted to remain higher than pre-pandemic levels throughout this year and next. And the homeowner vacancy rate of 0.9 percent was 0.5 percentage points lower than the rate in the third quarter of 2019 (1.4 percent) and virtually unchanged from the rate in the second quarter of 2020 (0.9 percent). An additional 22% selected 2021, and smaller camps predicted the next recession would arrive the following year, in 2022 or at some unspecified later date. The latest survey that those who think it’s a ‘good time to sell’ (56%) have outnumbered those who think it’s a ‘good time to buy’ (54%). A multi-generational housing market is creating limited supply and increased competition, driving up prices at the affordable end of the market for the foreseeable future. In this case, you face a seller’s market as soon as people are allowed to go out shopping. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic. Social-distancing requirements are also likely to hold construction back in the coming months. This is a faster rate of decline compared to the 38.1% decline in August. In either case, the overall outlook points to declining rent growth in the short term followed by a gradual period of recovery. It's mainly due to an unprecedented health crisis and economic uncertainty that has compounded this temporary restraint on real estate transactions. The result would be that prices are going to plummet again and the real estate sector will likely cool off. The seasonally-adjusted estimate of new houses for sale at the end of September was 284,000. The third quarter 2020 homeownership rates in the Midwest (71.2 percent) and South (70.8 percent) were higher than the rates in the Northeast (62.0 percent) and West (62.1 percent). (FOX 2) - Six months into the pandemic and the strength of the real estate market in Michigan right now may be surprising to you. https://www.investopedia.com/terms/a/affordability-index.asp If the unemployment rate increases, it has a direct impact on vacancy rates, just as what happened this year since March. "The 2021 housing market will be much more 'normal' than the wild swings we saw in 2020. This is 3.5 percent (±19.9 percent) below the revised August rate of 994,000 but is 32.1 percent (±28.8 percent) above the September 2019 estimate of 726,000. Ratios above 100 indicate that the typical household has more income than necessary to purchase the typical house. Applications for home purchase loans improved slightly on the week, halting a streak of four straight weekly declines. In the meantime, home prices will grow an average of 4.1% over the next three years, above the long-term average of 3.9%, according to the report, based on a survey of 43 economists at 37 leading real estate organizations. The rapid turnover reflects the faster than usual pace of home sales despite the usually slower season. However, industry experts are seeing more positive conditions in many suburban markets. If you're wondering what the state of the housing market will be like over the next six months, especially if you're an investor, then here is some good news for you. San Francisco, CA: 1-bedroom median price dropped 1.1% from the month prior to $2800. Home sales generally pick up in the spring-summer season. Locally, a total of 46 markets have crossed the recovery benchmark as of this week, two more than the previous week. All Rights Reserved. Housing prices are increasing due to tight supply and higher demand. While more sellers are comfortable entering the housing market compared to previous months, the lack of further improvement in newly listed properties signals that a return to normal conditions for the housing market is still just beyond reach at this time. Housing Affordability is driven largely by the gap between household income and home value. With high interest from buyers and a limited flow of new listings, the total active listings have been lagging behind from the previous year. According to Zillow’s Weekly housing data through Nov 7, the downward slide of inventory that began in late May continued, dropping 1.6% week over week — the largest weekly drop since January. With inventory falling to record lows, mortgage lending standards tightening, new and existing home sales are precited to fall back over the remainder of 2020. In a market in which there are a lot of vacant homes or apartments, prospective tenants or buyers are at an advantage. The rental vacancy rates in the Midwest and South were higher than the rate in the West, and there was not a significant difference between the rates in the Midwest and South. Future sources of economic uncertainty, including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook. Hence, home price growth will flatten, with a forecasted increase of just 1.1 percent. As the population of millennials is increasing, the demand side of housing remains strong. According to Freddie Mac, mortgage rates continue to slowly drift downward. If the reopening is followed by another wave of the COVID pandemic leading to a shutdown, the “double-dip” is a possible result (W-shaped recovery). The NAHB/Wells Fargo Housing Market Index (HMI) index is designed to measure sentiment for the U.S. single-family housing market and is a widely watched gauge of the outlook for the U.S. housing sector. A forecast by Haus shows home prices dropping between 0.5 and 2.5 percent from October 2020 to July 2021. The whole new policy aims to address the immediate economic problems caused by the pandemic-induced downturn. The median inflation expectation remained unchanged at 3.0 percent at the short-term horizon, while it declined 0.3 percentage point to 2.7 percent at the medium-term horizon. In the top 10 most recovered markets for the pace of sales, time-on-market is now down 25 percent, on average, year-over-year. The growth of new listings has begun to decline in November which further impacts the total inventory. Housing markets that are more heavily impacted should expect a slower recovery than markets that were hit less severely. According to Zillow's, seasonally adjusted home values would increase by 2.9% between September and the end of 2020, and rise 7% in the 12 months ending September 2021. The total housing inventory has reached 37.7% lower than at this time last year. Year-over-year, contract signings rose 20.5%. This amounted to 506,000 fewer homes for sale compared to October of last year. Home Buyer Lost The Bid, But Won The House! Over the long term, the U.S. will probably face slower growth, a weaker dollar, and a huge debt related to paying for the crisis response. As affluent New Yorkers are buying houses in suburbs, the real estate market in those areas has prospered. New listings are a necessary further growth in home sales, so the additional improvement here will be important for home buyers to make more purchases. It’s similar to any other index where you have a starting point or a starting year and you peg it at a hundred and it just goes up and down from there. https://www.cnbc.com/2020/03/19/coronavirus-update-home-sales-could-fall-by-35percent-as-spring-market-stalls.html The federal government’s shutdown of so-called non-essential businesses put a hold on most real estate transactions. Seventy-one percent of homes sold in September 2020 was on the market for less than a month. The ‘home price’ component of the recovery index – which tracks growth in asking prices – is now at 109.3, an increase of 0.1 points since last week. Current‑dollar GDP increased 38.0 percent, or $1.64 trillion, in the third quarter to a level of $21.16 trillion. Overall, the housing inventory in the 50 largest U.S. metros declined by 39.6% percent year-over-year in September. These 13 housing crash factors will shape the housing market. According to Zumper's National Rent Report (November 2020), overall, the national 1-bedroom median rent decreased 0.5% last month to $1225, while the 2-bedroom median decreased 0.4% to $1483. The US housing market is far from crashing in 2020 or 2021. An expected reacceleration of GDP growth in 2021 should help push sales volumes higher. The state unemployment rate is forecast to jump to 13.3 percent in 2020, before dropping to 8 percent in next year. Michigan is 78% during this period. One of the negative housing predictions is that the supply in the form of foreclosed homes may overwhelm the demand by many folds in 2021. A seller would always prefer sales to a list price ratio of 100% or more. They have an abundant supply of renters in the high-income bracket with more disposable income who are willing to compete for the best apartments and rentals.