As we continue to work through the current health crisis, questions inevitably turn toward economic recovery. What will this recovery look like? How long will it take? When will life get back to some semblance of normal? While many answers are unknowable, we can answer questions relative to the housing market and point out significant differences between 2008 and 2020.
Will we see a significant number of foreclosures?
No. Despite widespread unemployment, foreclosures will not be as severe as 2008 because today’s homeowners have more equity in their homes. According to John Burns Consulting, 58.7 percent of homes in the U.S. have at least 60 percent equity, and 42.1 percent of all homes in the U.S. are mortgage-free.
Are people still buying homes?
Yes. The homeownership rate increased to 65.3 percent for the first quarter of 2020, a number that has been rising since 2016 and is the highest seen in eight years. The pandemic has shown that homeownership carries tremendous emotional benefits, providing security and comfort to those who are sheltering in place with their families. Demand was strong and inventory was thin prior to COVID. According to the Colorado Association of Realtors, the Colorado housing market in March still had record- low inventory and high demand as buyers continued to buy homes.
Is my home going to lose value?
It depends. The recently released Existing Home Sales Report from the National Association of Realtors (NAR) revealed 3.4 months of inventory nationwide, indicating a strong sellers’ market. March’s national price increase marks 97 straight months of year-over-year gains. At the local level, inventory is even tighter. While sales declined in April during the stay-at-home orders, home prices held strong and should maintain their value barring any additional unforeseen pandemic- related setbacks.
