HOUSTON – (By Dale King, Realty News Report) – The coronavirus pandemic damaged the nation’s economy, causing unemployment to soar and businesses and restaurants to fail and schools to close.
“We expected that the housing market would get slammed,” said Lawrence Yun, chief economist for the National Association of Realtors.
But after an initial shock, the anticipated drop in home sales across the US didn’t come to pass, said Yun, speaking on a panel of real estate economists at a conference Wednesday.
The nation experienced strong sales as mortgage rates fell and the trend should continue for a while, the panel of economist said at Day 1 of NAREE’s 54th Annual Real Estate Journalism Conference presented by the National Association of Real Estate Editors (NAREE). Carried “virtually” online, the two-day event featured three economists on a panel called “Economic Forecast: COVID Era and Beyond.” The moderator was Steve Brown of the Dallas Morning News.
A new surge in COVID cases has placed more pressure on the economy and the ability of small business too survive in being tested.
For this reason, he said, Congress must pass a stimulus bill as quickly as possible. Democrats and Republicans on Capitol Hill have been wrangling over a financial rescue package for weeks.
Yun, plus the other members of the panel — Frank Nothaft, chief economist at CoreLogic and Danielle Hale, chief economist at Realtor.com– agreed that an economic rebound is due in 2021. In fact, some recovery is already being seen.
Not only did the real estate market hold its own through the pandemic, but so did housing prices. A combination of low mortgage rates and a lack of residential inventory led to home price increases. Yun said the price of homes increased 4.9 percent in 2019, shot up 6 percent in 2020 and is likely to see a hike of another 3 percent in 2021.
Hale came up with the following forecast for 2021: Home sales, up 7 percent; home prices, up 5.7 percent; mortgage rates at 3.2 percent, with a mini spike to 3.4 percent by year’s end. Housing starts should increase by 9 percent, she said.
Mortgage rates, she noted, have hit historical lows under 3 percent recently.
Nothaft offered some bullet points in his report:
- Mortgage rates remain low, supporting refi and home purchases. “Low mortgage rates [are] projected to continue in 2021 and 2022.”
- 2021 refinance [will be] less than in 2020, more than in 2019.
- The U.S. Home Price Index is forecast to rise, albeit slower than in 2020.
- Affordable shelter remains a challenge for many families.
- Distressed sales will rise but remain small compared to the Great Recession.
Nothaft said homeowners are facing a serious delinquency in mortgage payments. “Forbearance provides a financial crutch,” he said. “But if income does not recover, distressed sales will rise.”
He said serious delinquencies were at a low of 1.2 percent in February 2019, but have risen, hitting a peak of 4.2 percent in September.
Coincidentally, the list of Top 10 housing markets in the nation today is skewed to the West Coast, with Sacramento, San Jose, Seattle, Oxnard and Riverside, Calif., on the list. Others include Denver, Phoenix, Boise, Harrisburg, Pa. and Charlotte, N.C.
Realtor.com listed two Texas metros as showing “strong growth”: The Dallas/Fort Worth/Arlington area, up 11.3 percent in sales and housing prices up 7.3 percent, and the Houston/The Woodlands/Sugar Land region, up 5.3 percent in sales and prices increasing 4.6 percent.
Another impact of coronavirus – a hike in the number of people who work at home – will have an indeterminate impact. Yun said many people will purchase larger homes to accommodate home offices or classrooms. Hale noted the same emphasis on home-based employment will send some folks to search for homes in the suburbs, away from downtowns.
Dec. 10, 2020 Realty News Report Copyright 2020
File: Covid-Era Home Sale
Photo Credit: Ralph Bivins, Realty News Report. Copyright 2020
File: (2) #NAREE2020. Economists: Covid-Era Home Sale Surge to Continue.