When Will the Market Tumble?Apr 15, 2021
MARKETS ARE AT ALL-TIME HIGHS, THE GOVERNMENT IS PUMPING UP THE ECONOMY, AND IT IS ALL BEING HELD UP BY STILTS.....
No one could have predicted it.
Not the economists, not the real estate agents, and especially not the nation’s homebuilders.
But a pandemic caused an emotional run on housing unlike any other.
Now, one year after the Covid-19 crisis shut down and warped so much of American life, things are still unpredictable, but the outlook isn’t bright for housing.
In fact, it looks like the perfect storm for a correction.
Home prices are overheated, mortgage rates are rising, the supply of homes for sale is anemic and consumer confidence in the housing market is falling.
Pandemic-related mortgage bailouts are set to expire this summer.
A year ago, home sales ground to a halt.
No one wanted to buy or sell or even enter a home, given all the physical and economic uncertainty that Covid-19 brought.
But just a few months later, housing hit the gas pedal, and prices followed.
The frenzy was hugely emotional, as the nation saw most aspects of daily life suddenly confined to its properties.
Space became a major asset.
It was also fueled by very attractive mortgage rates, which set more than a dozen record lows.
After plunging nearly 18% from March to April and another 10% from April to May, sales of existing homes shot back up nearly 21% in June, according to the National Association of Realtors.
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” Lawrence Yun, NAR’s chief economist, said at the time. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
Yun was right – but his prediction still turned out to be too conservative.
Homes sales were not only sustainable, but they were also robust.
By August sales were running at the fastest pace since 2006.
The average rate on the popular 30-year fixed mortgage began in 2020 right around 3.75%, according to Mortgage News Daily.
It then fell at the start of the pandemic in March, shot up briefly in April, when the first economic stimulus was announced, and then dropped precipitously throughout the rest of the year, setting more than a dozen record lows.
Now rates are moving up again, as another financial stimulus passed, and the economy begins to finally open up significantly.
The recent jump in employment should keep rates on an upward trajectory.
Low mortgage rates last year, combined with low supply and high demand for housing, lit a furious fire under home prices.
By January of this year, prices were up more than 10% year over year, according to CoreLogic.
Prices are now rising at the fastest pace since 2006.
In some markets, like Seattle, Phoenix, and San Diego, the gains are even larger.
These enormous gains have led some to claim the housing market is overvalued.
A recent report from Fitch Ratings claimed prices nationally were 5.5% overvalued.
An epic housing shortage
In addition to high prices, buyers this year are facing the worst supply situation on record.
There were nearly half as many homes for sale at the end of February compared with a year earlier, according to a new calculation by realtor.com.
Low supply was exacerbated by a drop in the number of new listings to come on the market in January and February, due to exceptionally icy weather in much of the country.
The result is that this is currently one of the most competitive housing markets in history.
Nationwide, 58% of the home offers written by Redfin agents faced bidding wars in January, up from 53% in December.
That makes nine straight months in which more than half of all offers saw competition.
As highlighted in the above video by The Hill's Krystal Ball segment the fear is a housing crisis is inevitable.
So is the Foreclosure Tsunami Coming??
So right now, here are the facts:
- 10 million people unemployed (U6 numbers)
- 4 Plus million people are late on their mortgages
- 8.4m pending evictions
- 200K business has permanently closed
This is tragic, BUT I believe it's one of the biggest opportunities of our lifetime!!
What if we could actually help people save their credit and the majority of their equity AND make a fortune as well.
You see, once the foreclosure moratorium is lifted, property owners will have roughly 60-90 days to either pay off the late amount, which will be significant OR sell the property.
We all know the cards are about to fall.
The stock market is at all-time highs, the housing market is insane, as millions of people are still unemployed, PLUS the government is pumping trillions into the economy.
What is going on?
What does this mean for you?
It means that you need to be on the right side of things when "IT" hit's the fan!
You need to be equipped with the knowledge and know-how, you will need to know how to buy homes at discounted properties or even without risking any cash or credit at all.
You need to know how to position yourself to provide solutions to those in need and more than anything else you need to know how to plan your long-term wealth.
When it rains GOLD, grab a bucket, not a thimble!
If You're Interested in Pink's approach to Real Estate Investing and want to learn more, you NEED to check out our PINK Experience! We will be breaking down the strategies that we leverage every day. We will show you how you can find deals in your market, take them down and make life changing profits. This is a two day virtual event, click the link below to learn more!
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