2020 Housing Crisis Update | When Will The Real Estate Market Collapse And Home Prices Decline
Housing Crisis Update, 2020 – why is the median residential real estate price hitting all time records?! When will the housing market collapse? We provide the most updated details on what is happening in the real estate market, and when the global economic crisis is going to start. The median home price in the United States has hit another record high, supply is down and demand is up. When will the housing market correct for the huge shocks that just hit the market?
So, was April 2020 the BOTTOM in the housing market?! Not by a long-shot, and the data clearly shows how this is going to play out over the next several months, before we check out the shocking headlines it would be great if you could gently tap that like button and then buckle up as this is going to get extremely messy!
As you’re well aware, the unemployment rate has surged to Great Depression Levels, and at this point there are more than 40 million people out of work throughout the United States, which is a huge number when compared to the 5.8 million that were unemployed in February. And the unemployment numbers keep getting worse. In San Diego California where I happen to live, the unemployment rate is now more than 30%. To put that in perspective, during the great depression the unemployment in San Diego was 24.7%. Very scary numbers. But what you’re going to say to me is Kristian, these unemployed people will be going back to work soon, right? Not so fast! Georgia was the first state to open the economy back up, and their numbers are still getting worse – as you remember, their Governor was vilified even by President Trump that they were opening too fast during the last week of April. But what we’ve seen is that business is off more than 20% in Georgia and people are still not going out. Not that you care too much about the Chinese Economy, but predictions are that they have 130 million people looking for work, and the government has refused to even predict what 2020 will look like and how long it will take for them to recover.
As was alluded to in the opening clip, the National Association of Realtors recorded historic dips in the number of home sales. That’s not shocking news, less people are listing homes for sale, thus less homes are selling. Here is a regional breakdown of the drop-off in number of sales. As you can see, the West was hit hardest, with a 25% decrease in number of sales, although home prices went up 6.1%. A simple economics lesson in supply and demand – interest rates are in the 2% range and buyers who still have jobs are making multiple offers on any property on the market.
Meanwhile, mortgage forbearance increases to Record Levels with over 8.1% of all mortgages not making payments. Did you ever think that maybe people want to buy a home so that they can take advantage of not having to make a payment? Although that’s probably not the case, having over $1 trillion in loans not being paid is a very scary number. We can see in the commercial real estate space, they have things even worse, there’s no chance to re-fi, and defaults are skyrocketing. How much money will banks and lending institutions need to keep in reserves to allocate for unpaid loans? When will the residential lenders stop making new loans?!
With large corporations like Hertz filing for Bankruptcy, laying off tens of thousands of employees, and consolidating it’s 19+ billion dollars in debt, is it really a good time to be buying real estate?! Probably not… It’s no surprise that Consumer Confidence has fallen to it’s lowest level since the 2008 housing crisis, but this time the problems are much worse and much wider spread. When people don’t have jobs, they can’t buy anything, and demand for houses is going to run out soon… Please leave a comment below on when you think that the real estate market will crumble, and subscribe and make sure to tap that bell for future videos!
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