Ask anyone who’s tried buy a house this year how the experience was and you will likely hear similar reactions.
“There are no houses to buy.”
“Apartments are overpriced.”
“There is just too much competition.”
Low inventory stock, Offer warsand excessive asking prices have determined the residential property market since the beginning of the year. And although the number of available apartments has increased slightly in recent months, it is still far from normal. As a result, many buyers struggle to find a place to call their own.
But things could change later this month. Here’s why.
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Forbearance exits could boost more advertisements
Many homeowners faced financial hardships during the pandemic. Those who couldn’t keep up with their home payments could get their home loans in indulgence as part of the CARES Act, the draft law on massive coronavirus aid that came into force in March 2020.
The CARES Act allowed homeowners who were lenient to take a break mortgage Payments for up to 18 months (initially it was only 12 months but then it was extended). That means that those who take their mortgages hourly, once they become an option under the CARES Act, will let that 18 month clock expire at the end of September. And at this point, a lot of people might choose to sell their homes instead of paying off their mortgages.
Why? For one, some homeowners may not benefit from that pandemic, and those who cannot keep up with their mortgage payments prefer to sell and downsize their homes rather than struggle. (To be clear, loan service providers are encouraged to work with borrowers to help them stay in their homes, but some people may find themselves in such a dire situation that even the loan service providers’ flexibility is insufficient.)
In addition, residential values are currently increasing at the national level. This means that homeowners whose loans are deferred can sell better now than they have in the past.
In fact, because of the way property values have risen, many people who abandon their indulgence may be able to sell their homes for enough money to pay off their existing mortgages and start fresh elsewhere. And that’s an option that some may want to pursue even if they are not in financial trouble.
Because of this, late September could be a good time to buy a home. As more inventory comes in, buyers have more properties to choose from.
Also, homeowners who have to discharge their homes for financial reasons may be willing to accept less money for their homes if it translates into a quick sale. And while this is an unfortunate thing for those in need, it does give buyers an opportunity to get their hands on a home at a more reasonable price than what is available in the market today.
What’s later this year?
Not all of those who deferred a mortgage did so at the end of March 2020. Those who waited until April or May last year to defer will not see this protection expire until October or November this year. At this point we could see more homes for sale if owners choose to discharge their properties rather than keep paying for it.
In any case, the housing stock could increase in the second half of 2021. So buyers who have had difficulty buying homes may soon have better luck – if not in September, then in the following months.