There has been a lot of doomsaying regarding the real estate market. This might seem shocking considering all of the positives. Mortgage rates have hovered near historic lows, which has increased demand from home buyers all across the nation. Combined with record low inventory, home prices and home values have shot up everywhere. This has been a boon for homeowners who have seen their home equity greatly increase over the past year. In spite of all of this, naysayers have been arguing it is only a matter of time before the real estate market crashes. Negative predictions assume the economic consequences of COVID will cause millions of Americans to lose their homes. One of the triggers that the real estate doomsayers have been constantly pointing to is the end of the eviction moratorium. Thankfully, the CDC just extended the eviction moratorium meaning dire market predictions won’t be right anytime soon. 

The Flawed Case for a Real Estate Crash

Negative predictions regarding the real estate market assume that millions of homes will flood the real estate market as renters are evicted and homeowners face foreclosure. At the beginning of the pandemic, this scenario did not seem that far fetched. Lockdowns caused millions of Americans to become unemployed and millions. did fall behind on rent and mortgage payments. However, measures taken by governments at every level stopped the wave of evictions and foreclosures from ever happening.

There were various approaches implemented at the same time that led to a real estate resurgence instead of a repeat of 2008. First, local and state governments, as well as the federal government passed eviction moratoriums. These moratoriums prevented renters from getting kicked out of their homes even if they fell behind on payments. Second, the federal government also passed foreclosure moratoriums and expanded forbearance options, which saved homeowners from foreclosure. Third, the federal government provided direct stimulus payments to Americans, allowing many to catch up on rent and mortgage payments. Altogether, these efforts created stability in the real estate market, which has allowed the market to flourish in spite of the ongoing pandemic. 

Importance of the CDC Eviction Moratorium Extension

Real estate doomsayers have been pointing to the end of the eviction moratorium as a key domino that would trigger an eventual housing market crash. The argument assumes that if millions of renters are evicted it would lead to a glutton of properties, which would crash rent prices. In turn, real estate investors who rely on rental income would fall behind on their own mortgages, which would cause a wave of foreclosures. 

The logic of this kind of worst-case-scenario-thinking does make sense. However, it does not take into account the government’s ability and willingness to extend these moratoriums. When the initial moratorium was put into place it had a specific expiration date. Thankfully, governments at all levels have done everything in their power to prevent the doomsday scenarios predicted from ever materializing. Every time we have approached an eviction moratorium it has been extended. 

The July expiration of the eviction moratorium is the closest we have come to seeing if the moratorium’s lapse would truly lead to dark days. The federal government moratorium was set to expire at the end of July and President Biden did not extend it over fear of his legal ability to do so. Instead, President Biden asked Congress to extend it. The situation seemed bleak as Congress was unable to come to an agreement and instead left on their planned recess. Thankfully, the CDC stepped in and extended the eviction moratorium themselves. Renters now have until October 3rd until this current moratorium ends. This most recent extension is expected to protect 90% of renters from being evicted. However, as long as the pandemic is raging, it is likely that we will continue to see more extensions. 

More Resources for Renters and Homeowners

In addition to moratoriums on foreclosures and evictions, governments have provided additional resources for homeowners and renters. The latest round of stimulus passed by the federal government provides states with funding to help renters and homeowners catch up on overdue rent and mortgage payments. The Consumer Finance Protection Bureau has created a website that outlines all of the help that renters and homeowners can access to help them with rent and mortgage payments. 

Additionally, homeowners with loans through federal agencies have even more resources. Homeowners who have VA loans, first-time home buyers with FHA loans, or those with USDA loans can apply to have their payments reduced. They can also apply to have any missed payments added to the end of their current home loans. 

Final Thoughts

As long as the pandemic is ongoing and many households are behind on rent and mortgage payments, there is always a chance that doomsday predictions will come true. However, for the past year it seems that every level of government has been aware of these dire possibilities and is doing everything possible to prevent them. The CDC’s latest extension of the eviction moratorium is proof and this should give great confidence to home buyers and homeowners. Measures like these go a long way toward ensuring the great real estate run we have witnessed will continue into the future. Homeowners should continue to see the value of their homes rise and home buyers can buy their dream home with the confidence the market won’t crash immediately after. Instead of fretting about possible disaster around the corner, take advantage of today’s low mortgage rates and make your dream home a reality. 

If you are a homeowner and would like to take advantage of today’s rates to try and refinance your home loan, contact us. At the same time, if you are looking to buy a home and lock in a low rate for the life of your loan, contact us. We can give you a complimentary mortgage qualifier to see which program is best for you.