- How much of a correction, we do not know
- It is too early to tell on the after-effects of the housing market due to the coronavirus pandemic
- The pandemic has devastated the U.S. economy
- The U.S. economy literally shut down overnight after the pandemic hit the Nation
- The 2020 housing market forecast was expected to be the strongest ever in the history of the U.S.
- There is more demand for housing than there is inventory
- However, the number one fear for all homebuyers and homeowners is job stability
The pandemic has skyrocketed unemployment rates like never before.
2020 Housing Market Correction Versus Housing Crash Dependent On Unemployment Numbers
Over 26 million Americans filed for unemployment claims in the past four weeks due to the business closures due to the pandemic:
- Unemployment numbers are supposed to get higher in the coming weeks
- Prior to the pandemic, unemployment rates were under 3.5% which is the lowest number ever
- Over 50% of qualified and pre-approved mortgage borrowers have suspended their home purchase process until further notice
- Most home buyers want to hold off to see how secure their jobs are in the coming weeks and months
- The housing market was stronger than ever prior to the coronavirus pandemic
- Everyone is nervous about the 2020 housing market correction
- Lenders are concerned about the potential number of foreclosures
- Homebuilders are worried about home purchase contract cancelations
- Homeowners are worried about a major housing crash and loss of equity
- Real estate agents are worried about the economic impact a 2020 housing market correction will have on their finances
In this breaking news article, we will discuss and cover the 2020 Housing Market Correction Due To Coronavirus Pandemic.
2020 Housing Market Correction And Recession
The official word is not out yet. However, due to the economic collapse due to the coronavirus pandemic, the United States probably entered into a recession. Prior to the pandemic online real estate company Zillow predicted a recession will happen in 2020. Many real estate experts predicted a housing correction in 2020 prior to the pandemic. Now with the coronavirus pandemic and the surge of unemployment that may reach 20% in the coming weeks, there is no doubt we will have a housing market correction. The U.S. economy was the strongest its ever been prior to the pandemic. The U.S. economy has been shut down for the past six weeks. As the economy remains closed, it will be that much harder for the economy to rebound. It will take time for the economy to get back to where it was prior to the pandemic. To add to a potentially depressing housing market, many loan programs have been discontinued such as non-QM loans. The secondary mortgage bond market now has no appetite for buying mortgage-backed securities that have borrowers with under 680 credit scores. It will be much harder to qualify for a mortgage.
Are We Going To Have A 2020 Housing Crash?
Zillow is a popular website that aggregates real estate price information and gauges market sentiment for homebuyers and sellers.
Analysts at Zillow said the following prior to the coronavirus pandemic:
As we close in on the longest economic expansion this country has ever seen, meaningfully higher interest rates should eventually slow the frenetic pace of home value appreciation that we have seen over the past few years, a welcome respite for would-be buyers. Housing affordability is a critical issue in nearly every market across the country, and while much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn. While a housing collapse ushered in the Great Recession of 2008 and 2009, most survey respondents didn’t think a downturn in the economy will be centered on the housing market this time around. They thought the Federal Reserve’s actions when it comes to interest rates would be the biggest reason for the looming recession. After all, if rates go up, it will be more costly to take out a mortgage, shutting some buyers out of the purchasing process. They noted that, if the Fed raises rates too quickly, it could slow down the economy and lead to a recession. Higher rates make mortgages more expensive, shutting some buyers out of the market. Survey respondents were more concerned with geopolitical issues before 2018, citing a crisis on that front as the most likely cause of a future recession. Those worries fell below monetary policy concerns. Other concerns are focused on a trade war with China, a stock market correction, and unexpectedly high inflation. Those same respondents expected the housing market to continue to grow, with home values expected to rise 5.5% this year. At this time a year ago, the real estate experts thought home values would increase by 3.7% this year.
The housing market dictates the economy. High housing demand means a strong economy. However, with the chaos in the real estate and lending industry, it is hard to tell the type of damage it the housing market. Will we have a housing market correction? The answer is yes. Will we have a housing market crash? This answer remains to be tested on the recovery time after states reopen for business.
Home Values During The Coronavirus Pandemic
There is no doubt that homes will be in demand. However, most homebuyers have suspended their home purchases due to concerns over their jobs. The unemployment rate is expected to exceed 20% in the coming weeks. Many states are planning on reopening their states. The key question is how long will it take the economy to recover after it reopens. Millions of closed businesses may not reopen. Too much damage has been done. The Trump Administration is doing everything they can in trying to help businesses recover from the coronavirus pandemic. This is a breaking story. We will update our viewers in any updates as the news develops.