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Written by: Phil Bradford
“Owning a home is a keystone of wealth -- both financial affluence and emotional security.” ~ Suze Orman
The quote signifies the happiness of being a home-owner. Indeed, it is known to us if you own a home then you’re the owner of heaven.
Unfortunately, reality has turned harder for Americans now. Housing experts have predicted that many cash-strapped Americans may be forced to sell their houses. The housing market may flood with surplus supply.
What is the reason beyond so much ruckus in the housing market suddenly?
You may know the reason, it is Coronavirus.
Does Zillow have anything to say about the sudden price-down of houses?
You may have heard about Zillow, one of the top-level online real estate database companies. The prediction made by Zillow has nothing positive about the American housing market.
Zillow had predicted in April 2020 that Coronavirus may shrink the prices of houses 2% to 3% all over the USA.
According to them, there would be a 50% to 60% decline in housing prices. This situation will continue until the February-March time of 2021 and after that, the housing sales will regain its pace by 10% each month.
What is the typical picture of a housing market during a financial crisis?
During the time of the financial recession, housing prices usually drop. It is the common picture that Americans are used to.
The 2-sided result is usually observed with a recession:
- The purchasing power of average Americans decreases with the lowering of household income.
- With the lowering of household income, the cases of mortgage defaulters rise.
- With the rising number of mortgage defaulters, the number of ‘ready-for-sale’ houses rises in America.
Have Americans observed this worrying trend before?
Unfortunately, the answer is, Yes.
During the early 1990s recession, the housing prices dropped by 10%.
The situation turned far worse in the 2007 to 2009 recession. The housing prices dropped 3 times more than the early 90s economic turmoil.
The housing prices dropped by 30% in the 2007 to 2009 recession.
What do the average Americans think about the pessimistic predictions about housing-prices?
These negative predictions have made the Americans who had the intention to sell their houses pessimistic.
The average American house-seller has started thinking that American may have come under a financial recession.
They are making the worst thinking that America may face a second wave of infection also. This second wave of infection may cause a deeper economic fallout in the USA as well as all over the world.
Here point to be noted that Zillow has predicted the situation of the US housing market around April-May 2020.
Surprisingly, the US housing market is not walking in the way, as forecasted by the housing experts.
Related: How To Prepare For The Future of Housing
Why has the American housing market surprised everyone?
The sudden Coronavirus outbreak has displaced the economic situation of America from its previous economic condition. The GDP has fallen and the unemployment rate has risen.
It is known to us.
The surprising matter is despite the bad economic situation in the US, there is almost no sign that the housing market is about to fall.
Housing market experts or financial websites, nobody is claiming strongly or have any proof that the housing prices are going to drop.
What is the actual housing market picture in May & June 2020?
$35 trillion is the market valuation of the US residential housing market. Everyone has expected the housing market will drop a significant point because of Corona.
The year 2020 has surprised everyone. The housing prices in May 2020 are 4.3% higher than May 2019.
The average housing market price is almost the same as it was in 2009, a decade ago.
Furthermore, real estate news is coming like, the costliest places in America, for example, you can say about San Francisco. The housing prices have taken the upside surge without any downward sign.
This is the actual market report of May & June 2020 in the USA.
Why are some housing market pundits still predicting a gloomy future of the housing market?
In May 2020, the housing prices have inclined by 4.3% in comparison with May 2019. Indeed, the news is true. Despite that not every housing-market pundit in the USA is optimistic about it.
CoreLogic Inc.; the financial and property data dealers have claimed the property price may drop by 6.6% in May 2021.
The other forecasts about the US housing market are that the price may be declined by 75% in 125 metros by May 2021.
The vacation destinations like Florida and Arizona may be worst-hit by the COVID-19-resulted-economic downfall.
Along with Florida and, Arizona; the casino-capital of the USA, Las Vegas may create the trio of worst-hit cities by the Corona pandemic.
According to CoreLogic Inc.; the house-rate prices of Las Vegas may dip more than 20% in upcoming months.
“The best time to buy a home is always five years ago.” ~ Ray Brown
What can be the expected news for other metros in the USA?
The trio-city of Las Vegas, Florida, and Arizona are going to be the worst-hit cities in the USA.
But the housing-market news of other US cities won’t be so good as per the prediction of CareLogic Inc. & Bloomberg.
- The housing market in Boston may decline by more than 11%.
- Denver may witness the housing rate decline by around 9%.
- Houston, the 5th most populous metropolitan, may decline by nearly 8%.
- News is not good for Los Angeles too. The housing price decline rate is around 6.5%.
- The condition of the ‘Big Apple’ New York is most stabilized among the 5 cities. Housing market predictions have said the price may not fall beyond 6% in New York.
Amidst the gloomy picture around the US housing market is there any good news?
If you take the home-owners’ view then it is not a bad phase for them. The mortgage rate is currently making a lower trend so you can earn cash-benefits by deciding mortgage-refinancing for your secured home loan.
With mortgage-refinancing, you can save some dollars on monthly payments. You can reduce your loan-term, lower the interest rate, and can lower your monthly payment.
At the time of the COVID-19 economic crisis, these saved dollars can provide you the much-needed relief. But you should take expert help before going for mortgage refinancing.
In the same way, you have an option too for unsecured loans like the payday loan. You can consolidate payday loans with bad credit after taking help from the experts. Just like you’ve taken expert help for mortgage refinancing.
What else?
The last thing that can be said, don’t lose your hope. The market is going through a correction now. So, every expert is giving his or her prediction. The practical news is currently the housing market is having an upsurge of more than 4%.
So, hope for the best. What will happen in 2021 we will see in 2021. Let’s end this article with a thoughtful quote.
“If you don’t own a home, buy one. If you own a home, buy another one.” ~ John Paulson
Author Bio: Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.
Related: 10 Things to Understand About Buying or Selling a Home