More Housing Inventory is Coming: 850,000 Borrowers Will Exit Forbearance Between August and October.
Who would have thought that a first in a generation pandemic would actually be a good thing for housing values? While the economy is facing new challenges including major supply chain issues (just look at the shipping costs for containers from Asia to the US) you start to realize that there has been a massive amount of money injected into the economy. While many people are getting stimulus checks, trillions of dollars have gone into the hands of the corporate welfare machine (usually benefitting those that are hardcore free market types). Also, in many high-cost metro areas you still have money flowing in from investors and in parts of California you still have foreign money coming in, largely from Asia buying homes with no contingency requirements and fast close promises. So no surprise that even for a professional working couple buying a home right now with limited inventory is problematic. However, much of this is because of a stunted market with inventory. As a new report highlights, inventory is set to increase by 15% over the next few months because of people exiting forbearance periods.
New Inventory is Coming
There will be more housing inventory hitting the market soon. As home prices are up and most are no longer in negative equity situations, some will decide to sell into this hot market. Obviously not paying your mortgage for 12, 14, 16, or even 18 months is a nice bonus that party is coming to an end. This research found that most are not going to bring their mortgage current. Assume someone took a forbearance and their monthly mortgage cost was $2,000 per month, some may be behind by up to $36,000 when the forbearance period ends. Okay, well what if you can’t make it current? You can defer the payments to the end of the mortgage but you still owe that and many got used to not even paying the regular monthly payment. So a sizable portion will be selling. How many?
The research finds that roughly 850,000 homes will hit the market for sale within the next few months. Current prices are too attractive in many locations. This should be happening within the next few months: next few months:
The big months will be September and October. While rent moratoriums have been extended, mortgage forbearance has not been extended. In many places, including high priced California, you will have many people enticed to sell their $1 million crap shack. The big question is will it slow things down?
The market has been hot because people are fighting for scraps with inventory. There has been such a stunting of the normal market right now. Think of these major economic supports for housing:
-Big investors buying places up
-Artificially low rates
All of this amounts to welfare for housing, investors, and homeowners. The argument here isn’t whether this is “good” or “bad” but it is telling when you have free market capitalist (many owning homes) who cry like little toddlers about socialist policies in other areas when they are getting some of the largest socialism ever known in history.
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