Between April 2020 and April 2021, housing inventory spiraled out of control, dropping further and further every month; by April 2021, housing inventory was 53% lower than it was in April 2020. The ensuing heyday for sellers was inevitable; low supply, paired with record demand, drove the selling price of homes through the roof.
It appears that the market is finally shifting towards normalcy. In May 2021, inventory increased by 3%, and rose by another 9% in June 2021. Moreover, the pace of sales has decreased as well. The simplest explanation is that housing prices have reached their peak; buyers are no longer able to pay what sellers are asking for.
Given that the foreclosure moratorium expired on July 31, 2021, and the mortgage forbearance program will come to an end on September 30, 2021, we can expect the market to cool down further. Specifically, the homeowners who were previously protected under the forbearance program, may opt to sell their homes rather than risk foreclosure. More houses on the market would further reduce the sales price of existing homes; if demand remains constant, and supply increases, the market price will decrease.
Of course, this doesn’t mean we are headed for a 2008-style crash, this is a different animal that isn’t infested with the parasites that caused the Great Recession. In fact, the market will still favor sellers as a new, very large, demographic comes into their own; Millennials. The main takeaway is that the market is cooling, not crashing.
At the Chernov Team we understand that knowledge is power, and knowledge of how U.S. Policy will impact the housing market is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.
Housing Market Expected to Continue Cooling, But No Crash is on the Horizon
