Another US Housing Crisis is in the Wings

This was the title of the lead story in Sunday’s Denver Post as written by The NY Times. This story was based off of a report released last week titled “The State of the Nation’s Housing 2021” written by Harvard’s Joint Center for Housing Studies.

Their report cites, “Americans are struggling with soaring home prices, affordability issues for both renters and owners, and the potential risk of evictions and foreclosures.” Home prices have soared because the supply of existing homes for sale dropped below 2 months late last year nationally for the first time ever. Daniel McCue, a senior research associates at JCHS said, “These outsized increases have raised concerns that a home price bubble is emerging. But conditions today are quite different from the early 2000s, particularly in terms of credit availability. The current climb in prices instead reflects strong demand amid tight supply, aided by record-low interest rates.”
This is incredibly true and what I have been “preaching” for years. Plus, if you are current homeowner with no plans to move soaring home prices are a HUGE BONUS!

Second, the federal eviction moratorium ends June 30th and the JCHS says there are roughly 7 million households who are behind on rent. But, from many conversations I have had and been a part of with other RE investors I wonder how many of these tenants have simply chosen to not pay rent and thus are behind even though they could have made their rent payments? As over 10 million people are still receiving incredibly generous unemployment benefits and making more money not working.

Third, according to the JCHS there are about 2.3 million households in mortgage forbearance as of March. But, nearly mortgage is owned by Fannie, Freddie, and Ginnie and when those borrowers leave forbearance their missed mortgage payments will simply be added onto the end of their loan and thus there is very little risk of foreclosure for them currently.

I have heard many unsuccessful home buyers this year tell me they believe that home prices will drop as millions of people will lose their homes to foreclosure. Not true! Especially in metro Denver where a huge majority of homeowners have jobs or careers in industries that have NOT been negatively impacted by the pandemic. How many homeowners do you know who work in retail, restaurants, and hospitality? I bet not many. Plus, there are jobs aplenty in both restaurants and hospitality right now going unfilled.

Finally, I don’t believe our state or federal government will let millions of people go homeless and there will be more aid coming for those who really need it. Thus, this headline I believe is patently not true.