Key Highlights
- Rough road ahead in housing sector due to falling appraisals, tighter loan market and glut of vacation rentals, according to Thomas Stone, a Sonoma County realtor quoted in Wolf Street blog
- Oxford Economics estimates 15% of homeowners may fall behind on monthly mortgage payments which could lead to foreclosures
Wolf Richter, the CEO of Wolf Street Corp. and editor-in-chief at Wolf Street, believes that pent-up supply could ravage home prices this summer.
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To make his point, Richter used housing data focusing on the northern San Francisco Bay Area housing market”
- -22% homes for sale
- -62% new listings
- -36% homes sold
- -44% pending sales
- +22% month’s supply of homes available for sale
Richter wrote in a blog post for Wolf Street, “This is supposed to be the spring selling season, and new listings are supposed to surge. But sellers aren’t interested in having potentially infected people traipsing through their home; and they know that buyers are woefully absent, and it doesn’t make that much sense to list the home because previously listed homes are still languishing on the market.”
Thomas Stone, a Sonoma County realtor who Richter quoted in his Wolf Street blog post, said, “The next big shoe to drop will be when appraisers call a declining market, probably in August but perhaps as early as July. And this bleeds into the difficulties of getting a mortgage.”
The tightening in the mortgage market, particularly in light of the fact that some 8.8% of all mortgages are in forbearance and 15% of those that aren’t may fall behind on their monthly payments, is a big deal. We may see delinquencies caused by the COVID pandemic that could exceed those seen during the Great Recession.
Oxford Economics wrote, “The uncertainty in the mortgage market has contributed to a significant tightening of lending standards that may persist even once a recovery is underway.”
Add to this tightening mortgage market that lessens the chances of a borrower actually obtaining a mortgage the large number of vacation rental houses supposedly listing for sale this summer in the completely dormant Wine Country housing market of Napa County.
Richter wrote, “There you have it…A most splendid housing bubble and an equally splendid vacation-rental boom that were both caught at the peak in their most vulnerable state by The Virus that upended everything.”
Thanks to Wolf Street and MarketWatch.
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