Options In Fall 2021 Housing Market
The declaration of covid-19 pandemic in early 2020 as a national health emergency forced governments to impose movement restrictions to help contain the spread. This, together with other policies, adversely affected different sectors of the economy, the housing sector included. Many organizations resolved to have their employees work remotely. This necessitated suburban settlement for families as students also conducted their studies on online platforms from home.
This started a trickle down effect that has been effecting the housing market through 2021. What first started as individuals not wanting or able to sell a home has lead to at home offices and changes in daily life. This eventually lead to a housing boom and major shift.
Low mortgage rates, which sit below 3%, accompanied by the high demand for houses, led to a soar in the prices. Statistics clearly indicate that more existing homes were sold in 2020 than in any other year since 2006. Which made mortgages cheaper.
However, the latest market trends (observed in May/June 2021) exhibit a twist in real estate activity. According to Realtor.com, reduction in time-on-market has decelerated in almost four months, implying some properties stay a little longer on the listing portals. This shows that besides being overvalued, the housing market is clearly not in a bubble. This can be attributed to the following factors:
Home prices have shown an incredible increase. They are up double digits nationwide since the beginning of the covid-19 effects. This comes on the background of stable price gains dating back to the worst in the repercussion phase of the 2008 financial crisis. Currently, there is a shortage of new homes to meet the demand, and the relative vacancy rate for homes for sale is lower.
At lower price points, more restrictive zoning since the financial crisis and expensive material and labour costs have affected homebuilders’ ability to put up homes.
Evident Emergence of Stress Lines
The rapid surge in home prices has rendered them overvalued. Countrywide, the prices appear overvalued by roughly 10% to 15% when comparing price-to-income or price-to-rent ratios eventually historical averages. Other markets even by 20%. These markets are therefore susceptible to price correction when mortgage rates rise.
This is inevitable as the Federal Reserve believes the economy is set to a full recovery, hence normalizing interest rates. It’s also expected that companies are going to recall their employees back to the office. The foreclosure moratorium and mortgage and student loan forbearances are also expected to expire soon.
“ATTOM released its May 2021 U.S. Foreclosure Market Report, which shows a total of 10,821 U.S. properties with foreclosure filings (including default notices, scheduled auctions, or bank repossessions) down 8% from a month earlier, but up 23% from a year ago. Foreclosure starts, meaning the initial notice of default on a mortgage, grew 36% year-over-year.” – nationalmortgageprofessional.com
Set Your Rent Options
Lease-to-own agreements give the renter an option of buying the home at a specified future time on completion of the pre-specified instalments. At ‘Set Your Rent’, prospective buyers who have struggles obtaining traditional bank loans but make consistent income, have initial payment and want to own a home get a chance to do so.
“According to Urban Land Institute, real estate market conditions and values in the U.S. are expected to rebound in 2021 and trend even higher in 2022, with single-family homes outperforming other sectors such as commercial, retail, hotel, and rental. Home prices will grow an average of 4.1% over the next three years, above the long-term average of 3.9%, according to the report, based on a survey of 43 economists at 37 leading real estate organizations.” – noradarealestate.com
All one needs to do is select the desired home. The company then buys and leases the house to the customer. No matter why you can’t get into a new home, Set Your Rent might be the solution for you!