WILL COLORADO SPRINGS HAVE A HOUSING CRASH?
November 20, 2020
Honestly, we have no idea. We truly wish we had a crystal ball to be able to give you a firm answer. However, every month we post our musings about trends to give you more background and tools to decide for yourself.
When we start researching the potential of a housing crash it becomes very clear that opinions vary from one extreme to the other. One side insists it will not happen any time soon while the other side is convinced that we are on the brink of a housing Armageddon.
Key factors to consider:
A shutdown could be in the cards with the COVID infection numbers steadily increasing again, but it would be detrimental to our economy.
A tenant eviction moratoriumis in place until 12/31/2020. Experts believe that without specific programs for renters this moratorium could lead to:
A homelessness crisis when the moratorium is lifted and renters are evicted without a place to go.
A bankruptcy wave when landlords default on their mortgages because they don’t have rental income to pay mortgages.
This could increase distressed property sales or at least increase the amount of homes fo
r sale. More inventory results in home price deflation.
It’s important to note that, according to the National Multifamily Housing Council, unpaid rents in 2020 have not significantly changed from 2019.
The Mortgage Banker Association reported that the percentage of mortgage delinquencies in Quarter 2 was at 4.4%. Compare that to a mortgage delinquency rate of 4.58% in Q4 in 2008 and it can seem unnerving. But dig a little deeper and you’ll see this rate includes all loans in forbearance for 90+ days. Remember, forbearance is when a mortgage company permits a homeowner to temporarily pay a lower mortgage payment or pause payments. The forbearance rate in September 2020 was 6.6%. A rise in reported delinquencies is expected when the forbearance rate is included in that statistic. It is important to keep in mind that these delinquencies might not indicate an impending foreclosure.
Closed businesses could be affecting home buyers and their ability to apply and pay for a mortgage. This could result in a reduced amount of home buyers combined with distressed homeowners needing to sell their houses. Decreased buyer demand + increased inventory = decreased home prices.
The bottom line is the numbers are skewed on the surface level. Research is more vital than ever.
Read original article: https://yourcoloradospringshouse.com/colorado-springs-real-estate-update/