Housing Market During The COVID-19 Lockdown Has Been Active

BREAKING NEWS: Housing Market During The COVID-19 Lockdown Has Been Active
Housing Market During The COVID-19 Lockdown
Gustan Cho Associates

The Housing Market During The COVID-19 Lockdown has been very active.

  • Many analysts and economists predicted another housing meltdown
  • Some even have predicted a real estate meltdown worse than the 2008 financial crisis
  • Turns out the Housing Market During The COVID-19 Lockdown has been very active
  • Builders have been very busy building new homes
  • The coronavirus pandemic has turned the mortgage industry upside down
  • Most lenders have increased lending requirements due to liquidity issues on the secondary mortgage bond markets
  • Investors had no interest in buying mortgages from borrowers with under 700 credit scores

Mortgage servicers were worried about going bankrupt due to the CARES Act enabling unemployed homeowners to be eligible for forbearance.

Forbearance Under The CARES ACT

Borrowers under forbearance get a reprieve for a period of time from paying their mortgage payments:

  • However, mortgage servicers still need to make mortgage payments to investors of mortgage-backed securities
  • Servicers also need to make payments on property taxes and insurance for borrowers who have an escrow account
  • A small percentage of forbearance, servicers can handle it
  • However, over 43 million Americans have filed unemployment claims in the past 10 weeks
  • If a flood of homeowners file for forbearance, servicers will go bankrupt unless they get a federal bailout
  • The forbearance mortgage program was another concern for analysts expecting a 2020 housing market meltdown
  • However, with the economy reopening and unexpected news that 2.5 million new jobs being created, it seemed the U.S. economy is stronger than ever
  • No doubt the economy will recover faster than anyone has expected
  • The housing market seems like it will be stronger than ever despite the COVID-19 pandemic

In this breaking news article, we will discuss and cover the Housing Market During The COVID-19 Lockdown Has Been Active.

Housing Market During The COVID-19 Lockdown Expected To Crash

The U.S. economy was thriving and booming prior to the coronavirus pandemic.

  • Then in March, the U.S. economy was shut down
  • The economic lockdown in the Nation affected millions of businesses
  • All non-essential businesses were ordered closed until further notice
  • Millions of businesses were closed
  • Millions of Americans were out of work
  • The Trump Administration implemented the CARES Act which included stimulus money for businesses and individual taxpayers
  • Over 43 million Americans filed unemployment claims

Never in history has the unemployment claims been so high.

High Unemployment Means Poor Housing Market

Economists and experts were predicting unemployment rates up to 25% unemployment by the end of the year.

  • Analysts were also predicting another housing market crash worse than the 2008 financial crisis
  • Due to the liquidity issues on the secondary market, most lenders increased their lending requirements on government and conventional loans
  • Many lenders were not interested in taking loan applications from borrowers with under 700 credit scores
  • Borrowers with under 700 credit scores were quoted very high rates and had to pay discount points
  • Many borrowers who were pre-approved prior to the pandemic were no longer pre-approved because lenders increased credit standards due to the coronavirus pandemic
  • Most lenders have stopped and/or halted many loan programs
  • Non-QM loans were suspended until further notice
  • Most lenders have stopped doing FHA and VA manual underwriting
  • FHA 203k loan programs were halted by most lenders

Lenders stopped doing down payment assistance mortgage programs. FHA and VA One-Time Construction Loans were suspended until further notice.

The Recovery Of The U.S. Economy And Economic Data Shows Promising

Which means data recovery from the US economy and the economy is promising

Many states started reopening starting May 1st.

  • However, several states like Illinois were pushing to extend their stay at home order until a later date
  • This drew protests and lawsuits by residents, business owners, and local politicians
  • People were upbeat in going back to work and start shopping
  • The housing market has been very active during the pandemic
  • Many homebuyers have been eagerly shopping for homes during the coronavirus lockdown
  • As mentioned earlier, the large unemployment numbers and claims are a sign of a poor housing market
  • However, there have been steady increases in home sales and mortgage loan applications during the lockdown

Homebuilders are enjoying record sales during the pandemic.

Housing Market During The COVID-19 Lockdown And Home Sales And Mortgage Industry Are Booming

Piotr Bieda of Gustan Cho Associates said the following:

New-home sales, a relatively small piece of the market, posted a surprise gain last month, and stocks of homebuilders have surged in recent weeks. That’s fueling optimism that the housing market, which was set for a hot spring season before freezing up when the virus hit, is bouncing back faster than expected. Housing has followed V-shaped recovery, no questions asked. But there are still major risks. 

Mortgage applications for home purchase loans at Gustan Cho Associates have been skyrocketing for the past 7 weeks. Due to the flood of mortgage loan applications on home purchases, GCA Mortgage Group turn times on refinances are now at 60 days. Most of our loans at Gustan Cho Associates used to close in less than 30 days. Due to the increase in loan volume, we had to hire three additional mortgage underwriters and four processors. In general, the housing market cannot skyrocket with over 43 million Americans filing unemployment claims.

Housing Market Forecast

What is the housing market forecast?

Analysts were expecting a loss of 7.5 million jobs in May. However, the job numbers last Friday came in at 2.5 million new jobs created. This sent stocks soaring. The Dow Jones Industrial Average is now nearing 28,000. The all-time high on the Dow was 29,000 just last February. The Dow Jones plummeted to 18,000 just a few weeks ago. Home prices have been increasing year after year. Many homebuyers were expecting a housing market crash during the coronavirus pandemic. However, from the look of things, it seems the housing market is going to keep on rising. The demand in homes remains strong for 2020. This holds true even with the pandemic. From the look of things, the U.S. economy is expected to recover sooner than expected.

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