The COVID-19 pandemic has resulted in a massive upheaval of the markets and of people’s everyday lives. Just about every area of business has been affected in some way, including real estate and the housing market.
If there is a bright side, though, it is that the pandemic is not currently expected to have as severe of an impact on the housing market as the 2008 recession. Read on to learn about how the housing market is shaping up for the COVID-19 recovery in Mobile, AL and beyond.
What the experts are saying
Analysts from Goldman Sachs recently released research and analysis forecasting the possible effects of the COVID-19 recession for homebuilders. The analysts say there is no current reason to expect the strain put on the market to be to the same degree as what we saw in the last recession, though there is expected to be a small single-digit decline on average home prices across the nation.
There are a few big differences in the market today versus the market 12 years ago that have resulted in today’s market being in better shape than in the past, making it capable of weathering this latest financial storm. Housing prices plunged severely in 2008, but any decreases now are expected to be nominal at most, with larger declines happening at the higher end of the market. Entry-level home prices are expected to stay resilient, largely because there is still a good balance of supply and demand.
Another big difference, aside from the degree of value drop, is that there will be fewer foreclosures. The last downturn saw excessive foreclosures due to the massive amount of supply in relation to demand. The same situation is not expected to occur this time around, because there are much stricter lending standards in place now than there were at the time of the 2008 downturn. In addition, mortgage providers and members of the Trump administration have taken extra steps to help people keep their homes.
A third difference is that new construction is not at the levels it was at in the mid-2000s. Construction of single-family housing in February was 40 percent below where it was during its peak in January 2008. There are a couple reasons for this—one is the closer attention being paid toward volume versus price, and supply versus demand. Another reason for this is that there has been a move since 2008 back to city centers and urban areas, which has resulted in a slowdown in suburban sprawl and new construction away from cities.
Because homeownership is still an aspiration of many Americans, it is expected that the balance of supply versus demand will stay in good shape. Mortgage rates will remain near historic lows. Homebuilders are better prepared for this recession than they were for the last one, even though there is expected to be a 22 percent decline in new single-family home builds this year.
For more information about the expected effects of COVID-19 on the housing market in Mobile, AL, we encourage you to contact the team of professional land surveyors at Polysurveying.
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