All Forum Posts by: Tariq Hakeem

Here are the latest housing market predictions for 2021 & 2022. The global pandemic shattered the world order and the US economy suffered its biggest blow since the Great Depression in the second quarter. It has been roughly one year when it put the housing market on hold for several months last spring. Even with rising mortgage rates and higher prices, economists say the housing market should remain strong due to very tight inventories and increasing demand as more millennials are projected to buy houses this year.

Now millennials make up the largest share of homebuyers in the US, according to a 2020 survey from the NAR. According to a new study by Realtor.com, buying is more cost-efficient than renting in a growing number of the largest cities in the country. This is encouraging news for the millions of millennials who are approaching peak homebuying age. Back in March of last year, the real estate market looked to be headed into a steep decline due to widespread stay-home orders.

Since then, homebuyers, supported by low-interest rates, have kept the US housing market afloat. The pandemic has certainly affected every sector but residential real estate market has been very resilient and it continues to be a pillar of support for the economy. The housing market bounced back in 2020 much faster than other sectors of the economy and has sustained that growth and pace into 2021.

2020 was a record-breaking year for the US housing market. The typical U.S. home was worth $266,104 in December, up 8.4% (or $20,587) from a year ago. A total of 5.64 million homes were sold in 2020, up 5.6% from 2019 and the most since before the Great Recession, according to Lawrence Yun, NAR's chief economist. Sales also rose 0.7% from November and 22.2% year over year. Existing home sales reached the highest level in 13 years.

In 2021, so far, the housing market continues to be competitive for buyers resulting in higher home prices and quick-selling homes. In March 2021, the median home listing price reached an all-time high of $370,000, up 15.6% compared to last year. The large metros saw an average price gain of 12.1% compared to last year.

The pandemic set in motion a furious scramble to buy vacation homes. Now, curbs on financing those purchases will test that market’s resilience.

The number of buyers who locked in mortgage rates for second homes in February was up 93% from a year earlier, far outpacing the 32% climb for primary residences, according to real-estate brokerage Redfin Corp.

But Fannie Mae FNMA -1.45% and Freddie Mac FMCC -1.46% are putting up roadblocks. The two mortgage giants, whose government backing is crucial to holding down mortgage rates, earlier this year began to cap how many of these loans it purchases, at the direction of federal officials.

The coronavirus pandemic has had a counterintuitive effect on the housing market. Usually, a slowing economy weighs on home prices. But many white-collar workers have done well, keeping their jobs and saving money by not commuting to the office. Plus, the coronavirus brought record-low mortgage rates and stoked city-dwellers’ desires to escape cramped living. It fueled bidding wars and sight-unseen purchases across America’s vacation zones, which already had dwindling stocks of homes for sale, real-estate agents say.

The booming market is also luring investors, some of whom have generated substantial profit by fixing up old homes and then flipping them. Home-price growth rose to a 15-year high early this year, locking many middle-income families and laid-off workers out of buying.

uyers attempting to snag second homes and investment properties accounted for 14% of all purchase-mortgage applications in February, a record in data going back more than a decade, according to the Mortgage Bankers Association, a trade group.

Hiring accelerated last month to the best pace since August, signaling a stronger rebound is under way that could deliver jobs to the industries, regions and workers hardest hit during the coronavirus pandemic. U.S. employers added a seasonally adjusted 916,000 jobs in March, the Labor Department said Friday. The gain affirms an accelerating employment trend after a recent stall and could be the start of a prolonged stretch of strong job creation. Meanwhile, the unemployment rate, determined by a separate survey, fell to 6.0%, a pandemic low. Last month more job seekers entered the labor market, which could provide a critical source of labor for employers ramping up hiring in the coming months. Nearly 2 million fewer Americans reported last month they were unable to work because their employer closed or lost business due to the pandemic and 500,000 less said they couldn’t seek work due to the pandemic.

@Evan Polaski

Agreed!!!

@Karl B. That is so awesome man! Very well said as well!!!

Good debt vs. bad debt

Debt doesn’t have to be a bad thing. Taking on some debt might allow you to achieve your goals or fulfill your dreams. Borrowing money can help you complete your education, purchase a home or fund your small business. Other kinds of debt could simply be necessary, like borrowing to cover an unexpected medical expense.

Mishandled debt, however, can become a serious financial and emotional burden. Debt turns bad when it is made up of loans that you cannot repay. And it gets worse when you accrue high interest and/or fees that exceed the value of your purchase. Bad debt might also include loans from questionable sources, like payday lenders who may offer quick cash at terms that are disadvantageous.

Before you get scared off by learning about debt, consider this: Understanding debt and planning for your financial future helps you be mindful of your money. Your core values will guide your approach to money management. If you budget and track expenses, you’re taking time to plan for what you value most. You’ll also be more likely to recognize situations in which you might overspend; special occasion spending like travel, birthdays, graduations or anniversaries, for example.

In other words, learning how to manage debt comfortably and when to pause before borrowing can help you enjoy the opportunities that good debt can provide while avoiding bad debt pitfalls.

At the end of last month, only 1,120 single-family homes and 904 townhomes and condos were available for purchase across all of metro Denver and a few nearby counties, according to a monthly update from the Denver Metro Association of Realtors.

To understand just how thin that supply is, the region has averaged 13,531 active listings at the end of February in records going back to 1985. Even though far more single-family homes are available to go on the market than in 1985 or 1995 or 2005 — about 815,000 total by U.S. Census Bureau counts — the number of homes actually available for sale has never been lower.

“The feeling of frustration and exasperation is present throughout the real estate community,” said Andrew Abrams, chairman of the DMAR Market Trends Committee, in comments accompanying the report.

Abrams detailed how he wrote one offer for $101,000 above the asking price and another for $90,000 above and lost them both last month.

But he adds that blaming sluggish sellers for stretching the market being tight as a drum isn’t correct. The number of new listings, 4,507, was up 6.9% from January and down 11.5% from a year earlier. Buyers closed on 3,641 residential properties, which was up 13.4% from January and 3.7% from February 2020.

The housing market, responding to historically low mortgage rates and pent-up demand, has moved at a faster and faster pace in Denver and other cities. The median number of days it takes a listing to sell is down to five days compared to 15 days in February 2020 in metro Denver.

Effectively, more than half of all listings that hit the market last month were claimed in under a week, a frenzied pace in real estate time.

A market accustomed to doing a waltz and maybe switching up to a quickstep or cha-cha now and then is rapidly tapping out Flamenco steps to the point of exhaustion. The median closing price of a single-family home in Denver shot up 4.1% month-over-month to $530,000 and was rising at a 21.8% annual rate in February.

Condos and townhomes aren’t as popular, in part because the pandemic has instilled a desire among buyers for more space. But even there, February’s median closing price of $337,250 is up 12.8% on the year.

What might calm the frenzy of what observers considered an already overvalued market spinning off 20% plus annual home price gains? As more sellers get the COVID-19 vaccine, they might become more comfortable with listing their homes, which would boost supply, Abrams suggested. Higher interest rates could also force more buyers to the sidelines by reducing affordability, calming demand.

But Elizabeth Renter, a data analyst at NerdWallet who recently completed a study on housing affordability, said higher interest rates, while dampening demand, also have the potential to exacerbate supply shortages.

“If current homeowners are put off by the higher interest rate they’d need to take on in a new home purchase, they may be less likely to put their current house on the market — something that could sink the desolate supply even lower,” she warned.

For homeowners in Colorado and across the country, 2020 was a year of enrichment unrivaled since 2013, when the nation was bouncing back from the housing crash.

U.S. homeowners gained $1.5 trillion in home equity last year, which works out to an average of $26,300 per household, according to a report from real estate analytics firm CoreLogic. Colorado homeowners, reflecting the above-average home prices in the state, did even better, with home equity gains averaging $32,000 last year.

Among the Colorado metros that CoreLogic tracks, Boulder residents enjoyed the biggest home equity gains at $46,673, followed by Colorado Springs residents at $33,284, metro Denver residents at $31,895, Fort Collins residents at $23,934 and Greeley residents at $20,118.

CoreLogic estimates the average home equity amounts homeowners were sitting on at the end of last year were as follows: Boulder, $400,038; Colorado Springs, $188,312; Denver, $258,894; Fort Collins, $230,998; and Greeley, $177,428.

Sharp gains in home prices boosted home equity, and the pandemic was a big driver. Early last spring, the Federal Reserve intervened to stabilize mortgage markets and push down interest rates to historic lows, which boosted affordability and increased demand.

Fearful of catching the virus in a cramped living environment, more multi-family tenants sought out a place of their own. The shift to remote work and school arrangements also fostered a desire for more living space to stretch out, among existing owners and renters alike. And the loss of amenities like concerts and shows also made urban apartment living less attractive.

Congress granted mortgage borrowers struggling to make the monthly payment forbearance, reducing the pressure on them to sell and keeping a source of supply off the market. When supply couldn’t meet the increased demand, prices surged and the inventory of homes available for sale plunged.

“This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake. As a result, we may see more of those currently renting start to enter the market in the near future,” said Frank Martell, president and CEO of CoreLogic, in comments accompanying the report.

The equity gains of recent years combined with super-low interest rates also allowed more borrowers to refinance. Some of that money went to fuel a record year for spending on home improvements, which in turn further boosted home values.

The federal ban on evictions has been extended yet again, bringing relief to tens of millions of renters struggling to catch up.

The Centers for Disease Control and Prevention extended its federal moratorium on eviction for non-payment of rent until June 30. 

It marks the third time the deadline for lifting the ban has been pushed back. The CDC's order first went into effect in September and initially was set to expire at the end of 2020. But then in December, the protection was extended until January 31. As one of his first acts in office, President Joe Biden called on the CDC to extend the ban until March 31.

But now, as that expiration date rapidly approaches, the CDC is once again extending the deadline.

It’s not just Denver that is competitive. Two other interesting charts below that.