- Duncan, senior vice president and chief economist with Fannie Mae, makes housing market predictions for 2021 in midst of COVID upheaval
- Much uncertainty continues as COVID resurges in country while economic and housing markets are impacted
Doug Duncan, Fannie Mae’s Senior Vice President and Chief Economist, recently offered his predictions for 2021 as both the economy and housing market continue to be turned upside down due to the ongoing, and in some cases resurging, COVID pandemic.
Duncan said, “At the end of 2019, we were at 3.5% unemployment. We think at the end of 20212, it will be roughly double that, around 6%.”
Q2 2020 saw a loss of some $1.7T in national income. Duncan estimates that about $1.2T will be recaptured in Q3 2020 once the data becomes available. Then, in Q4, Duncan expects the economy to slowly grow until “…by the end of 2021, we would expect to be back, just about where we were at the beginning of 2020.”
Duncan believes that homebuilders are and will continue to be the beneficiaries of remote learning and urban to suburb/rural migration patterns. “New home sales numbers had a big jump in 2020 and (there will be) more growth in 2021…” as long as homebuilders continue working diligently to build and build back inventory that immediately is sold.
Duncan is confident about holding the Federal Reserve to its word about keeping interest rates low into the future. Low, short-term mortgage rates are “going to be very good” for households and developing households into 2021 and beyond.
Duncan believes that one wildcard at this time is whether or not the government will have an effective safe COVID-19 vaccine with an effective, broad-based distribution strategy. Without such a vaccine and distribution strategy, Duncan predicts that the housing market’s current “V-shaped” recovery could become a “W-shaped” recovery.
Duncan said, “In that environment, I would not expect a normal housing cycle because what would happen is, then those businesses which have been able to keep going and keep their salary worker, who tend to be more in management in place, would start laying those people off and that’s when the risks rise on the housing side. But if we get a relatively broadly distributed vaccine that is demonstrated to be effective, then I think we do return to a normal housing cycle…(a cycle that will be viewed as a great opportunity for people to get in (and buy their own home.)”
Thanks to HousingWire.