Housing Market Update (November)

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Housing Market Update November 2020!

House prices are at an all-time record high. This should be the first point of concern for you.

Interest rates are historically low with inventory levels also extremely low pushing up house prices

Firstly please remember that there isn't just one housing market, there are tens of thousands of housing markets. Every city in your country is a separate housing market and even within each city there will be an area or region which will again be its own housing market

Although prices are still rising, we are starting to see some areas changing which further down the line will result in a change in pricing, downwards.

We’re seeing a continuation of migration patterns currently from large cities to more rural areas. I believe as we have more lock downs and restrictions on our freedoms, that this will continue going into 2021

As you will be aware, Joe Biden is currently the president elect (according to the media), although this hasn't yet been confirmed due to legal challenges from the Trump campaign.

And we know from the televised debates that Joe Biden stated he would approve more lockdowns if needed under his presidency, which would only add fuel to the fire and have more people escaping the big cities so this could go on for quite a while yet

I predict the USA will follow the UK soon with more lockdowns.

Forbearance: Phase 1 started on the 18th of March 2020 which takes it up to the 18th of September 2020. Phase two then begins on 18th of September 2020 and goes through to the 18th of March 2021.
16% of all FHA loans are now 60 days delinquent.
2 million people are 90 days delinquent
30% of all all renters are not making their monthly payment to their landlord

The States hardest hit for unemployment will be: California, Hawaii, Nevada and New York

Rental prices are dropping all over the place at a rapid rate as people are leaving the cities

The number of Mortgages currently in forbearance sits at around 5% or 3 million.

Unemployment: 700,000 new unemployment claims this week alone

Both the USA and the UK are now talking about doubling the capital gains tax interest rate

Most of the delinquent loans currently are FHA loans.

So when it comes to these housing markets, what might they do next to continue to stimulate the housing market?

We could see a return to 100% or more mortgages. Don't forget, the UK had 120% mortgages prior to the 2008 crash!

This sort of thing certainly fits in with the Biden housing plan which I've been reading about, which again, I'm not in agreement with. We've been there, we've done it, we know it doesn't work.

The other thing they could do is a 0% down mortgage for first time buyers, particularly to help new immigrants that come into the country to get onto the housing ladder. These are other plans I've seen being pushed around. Which I don't agree with. let's look after our military and frontline workers first.

The problem with most of this is: low interest rates. The banks will not want to create these sort of mortgages because they are just too high risk for the banks. And in fact the banks are already at a critical mass in my personal opinion with such heavy debt levels. And with current interest rates anything they lend out is extremely risky right now.

This means that government would have to get involved to somehow supplement this proposal. We are already hearing talks of this in the UK currently.

So overall, we are in a crazy period right now which is complex to track and forecast, but I still see a housing crash on the horizon. And if we do implement socialist housing proposals during a time of financial crisis, this is not going to end well because the USA isn't built upon a socialist system, it's built upon a capitalist system. So trying to implement all of this social housing at a rapid rate will only do one thing to house prices.

The UK stamp duty freeze ends in 2021, it's probably too late for some people to complete their purchase before then. But as long as you have a good conveyancer, you should get your you're a house completed beforehand.

DISCLAIMER
This video is for entertainment purposes ONLY & designed to help your thinking, not direct it. These videos shall NOT be construed as tax, legal or financial advice and may be outdated or inaccurate; all decisions made as a result of viewing are yours alone.
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