Covid 19 Housing Crash Coming Soon? | Real Estate Training

Did you know that 01/21/20 was the 2 year anniversary of Covid 19 appearing in the USA? We have all now experienced the 3rd worst pandemic in the history of humanity. 

What long-term effects will the pandemic have on housing (and civilization on a whole?)

24 months later, we have:

1- Record low inventory.  As of today, there are fewer than 1 million actively listed homes in the United States.

2 – Record high prices, with the average home price at $408,800, are projected to keep increasing by at least 16% in most markets for 2022.

3 – An all-time record of licensed real estate agents, as of today, 1.6 million.

4 – Mid-size and secondary markets have greatly benefitted by ‘The Great Re-Shuffle’, with people moving to more rural areas and away from urban centers.

5 – Even our language about houses has changed.  Now we have Zoom Rooms, Peloton Rooms, and ‘Cloffices’  (closet offices).

6 – The number of homeowners who refinanced or are in the process has doubled in the past 24 months.

7 – In spite of record-low inventory, we had a record number of sales, topping out at 6 million closings.

8 – We had 17 months straight of double-digit price gains.

10 – Record inflation with no end in sight. ‘The Great Reset’ is happening now. Housing will continue to INFLATE in a meaningful way for at least the next 12-24 months and then level off to 3-6% per year. The point is, today’s price will seem like ‘a deal’ in 12-24 months. 

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What happens next?  Will there be some sort of epic correction?  Will interest rates cause that?

A – Currently we have record LOW forbearance rates at less than 1.5% of mortgages and fewer than 1% of mortgages are in foreclosure.

B – Fannie Mae has predicted that rising interest rates in 2022 will indeed affect housing demand, but only by 3.2% fewer loan applications, almost all of them being first-time buyers who are priced out, FHA and VA buyers.  So far, even with rates inching higher, loan applications are up 8% this month.

C – New Construction will come to the rescue on some level.  Homebuilding has increased by 15.6% since 2020 with 1.7 million units set to be built this year.  Keep in mind this is a mixture of single-family, townhome, condo, and multifamily.

What should an agent do?

1 – Recognize that your number one job in your practice is to generate listing leads, contact them, prequalify, present, negotiate and close.  The buyers will come.

2 – Recognize and embrace the fact that you will need to do more, know more, and make more contacts to meet or exceed your goals this year.  More agent competition and fewer listings to go around.  Be the one with the listings.

3 – Know about new construction, know how to work with builders and new build sales reps.

4 – Stop expecting a market correction or crash.  It’s not happening.

5 – Get involved in coaching so we can keep you educated, motivated, and in action!

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