Housing Market Crash

This ARTICLE On The 2020 Housing Market Crash: Is The Real Estate Market Going To Crash Was PUBLISHED On March 15th, 2020

• The 2020 Housing Market Forecast was strong until the coronavirus outbreak in December 2019
• The coronavirus outbreak has disrupted the world economy
• Stocks entered in a correction territory a few weeks ago due to stock markets plummeting
• The stock market has entered bear territory due to dropping more than 20% since its all-time high on February 19th, 2020
• President Trump declared a national state of emergency for Americans on Friday, March 13th
• The Trump Administration has banned world travel for 30 days due to the coronavirus pandemic
• The Dow Jones and other market indexes are having 1,000 plus points up and down days
• Fear and uncertainty are overwhelming
• Many industries in the travel, hospitality, and others are being really affected by the coronavirus outbreak
• There is no cure and/or vaccine for the coronavirus
• There are more and more people testing positive and dying from this unknown deadly contagious virus
• Economists and experts predicted the housing and mortgage markets would not be affected for 2020
• Mortgage rates hit a historic all-time low
• However, economists did a complete 180 degrees and are now talking about a potential 2020 Housing Market Crash
• Are we going to have a repeat of the 2008 financial crisis?
• Is the U.S. headed to another Great Recession?
• Should Americans worry about their economic outlook?
• Are jobs secure?

In this ARTICLE, we will discuss and cover the topic of the Housing Market Crash: Is The Real Estate Market Going To Crash.

Will There Be A 2020 Housing Market Crash?

The stock market has been extremely volatile and has plummeted from February’s all-time high of over 29,000 to under 21,000 last week.

• The stock market is now trading in bear market territory
• A bear market is defined when the market plummets 20% or more from the all-time highs
• The sudden stock market crash has ended the 11-year bull market run
• The last recession we had was back in 2008
• Can we be headed to a recession?
• Will there be a repeat of the 2008 housing market crash?
• Will there be a 2020 housing market crash?
• We do not know whether or not we will be headed in a 2020 housing market crash
• However, home prices have been rising with no correction for the past several years
• Both HUD and the Federal Housing Finance Agency (FHFA) has been increasing FHA and Conventional Loan Limits for the past 4 years due to skyrocketing home prices

In the following paragraphs, we will discuss and cover what triggers a housing market crash.

What Americans Think About A 2020 Housing Market Crash

Is the Real Estate Market Going to Crash?

• Most Americans are very concerned and worried about a potential 2020 Housing Market Crash similar to the 2008 financial crisis
• Recent data released from a survey revealed that 57% believed there will be a 2020 housing market crash and pricing correction this year going into 2021
• 85% of Americans feel that due to a potential housing market crash and potential pricing correction it is a good time to sell their homes
• Many Americans still remember the 2008 real estate meltdown like it was yesterday
• Those who have lived through the 2008 financial crisis feel another housing market crash is in the works
• Many believe that today’s rising housing market is similar to the 2008 housing market prior to the big crash

With the unrest in the stock market and the coronavirus pandemic, most Americans think a recession is lingering and the housing market will go through a correction. As of now, there are no hard facts that the economy will take a downturn. Fundamentally, the US economy was strong prior to the coronavirus pandemic. As the coronavirus is spreading and more deaths are being reported, the economy can get worse. Uncertainty is the biggest fear not just among investors and Wall Street, but to the average American consumer.

11-Year Economic Bull-Market Boom

The US economy has been booming for the past 11 years without a recession. The economy was on turbo-mode after Donald Trump got elected as the 45th President of the United States. Home prices have skyrocketed year after year that both HUD and the FHFA had to increase FHA and Conforming Loan Limits for the past consecutive four years. There is far more demand than the inventory of homes. When demand exceeds supply, prices go up. Many pre-approved homebuyers have been looking for homes for months. Due to the coronavirus pandemic, mortgage rates have hit an all-time historic low. However, many Americans have put the brakes in buying a home since the news of the coronavirus pandemic.

The Main Reason For A Slowdown In Purchase Mortgage Applications 

Refinance mortgage applications are skyrocketing. However, purchase home mortgage applications are declining rapidly due to homebuyer’s concerns about job stability. When the stock market plummets like it has been doing, the yield on the US Treasury tanked under 1.0%. When the US Treasury drops significantly, mortgage rates drop as well. Mortgage rates have dropped to an all-time historic low. 30-year fixed-rate mortgages are now at 3.29% for prime borrowers. 15-year fixed-rate mortgages are now at 2.75%. However, the worst fear Americans have is how secure they are with their jobs. Even though the unemployment numbers are at a 50-year low, this was prior to the coronavirus outbreak. A large percentage of company CEO’s ordered workers to work from home. Many industries in the transportation, hospitality, and other industries where workers have human contact are hurting big time. What good is low mortgage rates when you are stressing over the security of your job. Americans are also worried about a housing correction and another 2008 financial crisis. Will we enter into a recession? Many believe the country is long overdue for a recession.

What Experts And Economists Say About A 2020Housing Market Crash

Many experts are unanimous about the US is long overdue of a recession. With a recession comes a housing market correction. In March 2017, former president of the Federal Reserve Bank of St. Louis William Poole wrote about another 2008 financial crisis in the coming months. Mr. Poole mentioned the fact that 36% of conforming loans require private mortgage insurance. Those numbers were similar to the data from 2006. William Poole was the chief of the Federal Reserve Bank of Kansas who predicted a financial meltdown coming soon in 2005.

Effects Of The 2020 Housing Market Crash

In the event, if there is a 2020 Housing Market Crash, it will not be close to the 2008 financial meltdown. Housing demand will still remain strong with the growing population in the US. The economy may have a setback but is fundamentally strong. There are new mortgage regulations that emphasize the borrower’s ability to repay. Mortgage rates seem like they will be at historic low levels for quite some time. Many lenders are creating and implementing more alternative financing loan programs such as Non-QM loans, bank statement loans for self-employment borrowers, fix and flip mortgages, and other unique niche mortgage programs. For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.

Are We In Danger Of Another Housing Market Crash And Credit Meltdown In The Near Future?

The housing market has been booming for the past several years. We have not seen a housing market correction for over ten years. Gustan Cho Associates has countless pre-approved borrowers who have been holding off on having a home under contract for over a year due to multiple offers. Homebuyers are buying homes over 10% or higher than the list price. Many of our borrowers at Gustan Cho Associates are waiting for a housing market correction. However, there are no signs of a housing market correction. Home prices keep on increasing. Nobody has a crystal ball. But all indications say there will not be another housing market crash like the 2008 financial crisis. In this article, we will cover the reasons why it is safe to assume homebuyers should not wait for a housing market correction and why it is safe to go ahead and buy a house now before you get priced out of the housing market.

The Coronavirus Outbreak In February 2020

Many analysts and so-called experts predicted a housing market crash after the coronavirus outbreak in February 2020. Unemployment rates have skyrocketed to over 20%, businesses were shut down, mortgage lenders eliminated non-QM loan programs, lenders started implementing lender overlays, and the world was in a panic crisis. There were talks of another Great Recession worse than the 2008 financial crisis and credit meltdown. However, the demand for homes has started climbing and sales prices started skyrocketing. As talk of COVID vaccines progressed and federal stimulus programs such as the CARES ACT were launched, home prices started to climb sharply.

Companies offering remote job positions for their employees enabled many remote workers to relocate to states with affordable housing which caused housing shortages. Tens of thousands of renters in major cities pulled the trigger in buying homes in suburbs. Historic record mortgage rates have added fuel to the fire on the nation’s housing shortage. Renters who were going to purchase homes in a few years pulled the trigger in taking advantage of historic low mortgage rates and start shopping for homes. In the following paragraphs, we will detail why we are not likely to have another housing market crash.

Business Model Changes For Remote Workers

Most companies in the nation have changed their business model by converting many job positions into remote jobs. Wage-earners no longer had to report to a brick and mortar location. This turned out to be a win-win for both the employer and employee. Employers no longer needed to pay high rent to accommodate workers since they were remote employees.

Many renters living in high-priced city apartments to have a short commute distance to work no longer needed to live in the city. Renters can now purchase a home in the suburbs or better yet, relocate to states with affordable housing and low taxes. Renters who had no motivation to purchase a home now changed their minds about becoming homeowners. With historic record low mortgage rates and being able to purchase a home with a yard in the suburbs, countless renters flocked to mortgage companies to get qualified and pre-approved for a mortgage to shop for a home. This is a big difference in circumstances from the 2008 real estate meltdown.

Are We In Danger Of Another Housing Market Crash: The Ability To Repay

After the 2008 real estate and credit meltdown, there were many new regulations implemented. Lenders are very selective in lending to homebuyers. Lenders make sure the borrowers have the ability to repay their new housing payments. Balloon mortgages and teaser rates are no longer legal and considered fraud in residential loan programs. There are hundreds of non-QM loan programs that are geared to help qualified homebuyers who cannot meet government and conventional mortgage guidelines. Self-employed homebuyers can qualify for 12 month bank statement mortgages.

Homebuyers with a recent bankruptcy and/or foreclosure no longer have a mandatory waiting period requirement with our non-QM mortgage program one day out of bankruptcy and foreclosure. Homeowners with equity in their homes can qualify for reverse mortgages where they no longer have to make a mortgage payment. Many homeowners who could not qualify for government and conventional loans  can now qualify for non-QM and alternative mortgages. Dozens of non-QM loans were launched in the past few years. Many homebuyers no longer have to wait the mandatory waiting period after bankruptcy and/or foreclosure. Gustan Cho Associates has non-QM mortgages one day out of bankruptcy and foreclosure with no waiting period with a 30% down payment. Many homebuyers recover and reestablish their credit and are able to qualify for a mortgage without the mandatory waiting period after bankruptcy and/or foreclosure. Gustan Cho Associates offers non-doc mortgages, asset depletion, and bank statement mortgages for self-employed borrowers with no income tax returns required.