Before we get in to 2021 we have to set up how we got there. With the global pandemic of COVID-19 hitting the US. There were a couple different things that may impact real estate in 2021.
Rents and Eviction Moratorium
Currently, our federal government has envoked a nationwide eviction moratorium which was put in place so that tenants that were economically effected by COVID-19 wouldn’t be evicted from their homes if they could not pay rent.
This has put some landlords in an awkward position. They may be renting their homes for free for the last 5-6 months or so while they may still have mortgages on these properties they are responsible to pay. Additionally, the current eviction moratorium doesn’t expire until the 1st of the new year and it could even be extended by the federal government.
Landlords hope a stimulus be put in place to help landlords or to help tenants pay their rent. But if that doesn’t happen, we are forecasting that in spring or fall of 2021 there may be a flood of rental homes hitting the market from landlords that are trying to recouped some of their losses.
Forbearance was an option that some homeowners opted for whether they were economically effected by the pandemic or not. This was an agreement by the mortgage lenders to let homeowners skip up to 12 months of payments.
Some lenders have said that the missed payments would just be added on to the end of the mortgage but not all. If homeowners were not careful or didn’t read the fine print the missed payments could be spread out on their up coming payments raising their monthly mortgage due substantially or the lenders could ask for the entire missed payment in one lump sum.
Depending on whether these home owners have been able to go back to work or find a job that would support their new temporary higher mortgage payments, this could force homeowners to either downsize for a lesser monthly mortgage or even go back to renting if they haven’t had sufficient enough job history to qualify for another mortgage. Either way, this could lead to an influx of homes hitting the market.
With the projected flood of new supply in homes on the market, demand will fall along with prices!
Good news / Bad news
This is good news for investors that have been saving for a rainy day! There could be ample low priced inventory to choose from as well as an influx of renters needing new homes.
Bad news for the seller’s that wanted to hold out for the “peak of the market”, We believe it has already happened, potentially for at least 3-5 years or so and the economy corrects itself.