CHARLOTTE – You might think the COVID-19 housing crisis has already started and we are in the midst of it. You might even find it hard to believe that the market could get even hotter. With record demand and short supply, even rental prices are rising fast.
Put all of these things together with the back rent owed and the delinquent home loans, it becomes a very tricky recipe. Plus, nearly 10 million people are still unemployed, which makes things even trickier.
A typical housing crisis happens when home values drop drastically. Right now, prices are increasing at record rates, which is causing concerns now and for the long-term, when it comes to affordability.
Still Too Much to be Sorted Out
It’s easier to look at things right now and believe the housing crisis is here. However, there are too many factors needing to be sorted out before the market can settle. If interest rates were increased, it could help cool off the market a bit. However, the Federal Reserve has made it clear, this is unlikely to happen for at least a year or longer.
June is going to be a telling month with foreclosure moratoriums and eviction moratoriums expiring at the end of the month. Unless something is done, millions of renters could be evicted as they owe up to a year in back rent.
Homeowners that have fallen behind on their mortgage might also see foreclosures looming in the near future unless they have enough equity in the home to sell it for more than what they owe. If they don’t, this could increase the housing supply to achieve more of a balance in the market. If too many foreclosures hit the market, home values could fall.
Is a Bubble Crisis Coming?
Whether you’re searching for homes for sale in Mint Hill, NC, or looking to sell your home, you might have heard a potential bubble crisis is coming. Some experts see this as a huge concern since prices are much higher than the highs of 2006 and 2007 and continue to climb. When enough supply enters the market, some are worried the big boom will go bust quickly.
The intervention of the government has kept a real financial crisis from happening, so far. However, the government cannot continue to pump trillions of dollars into the economy forever. If one or more of these factors go a certain way, it could mean the bubble will burst and home values could drop rather fast.
It’s hard to say whether the COVID-19 housing crisis has even started yet. Too many factors need to be sorted out before we will know what will happen. Several of these factors may sort themselves out in the upcoming months, however.
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