What The Ongoing Pandemic Means For Homeowners and Home Buyers

At this point, we all hoped that the pandemic would be behind us. Lockdowns first started happening in the second of March 2020. At that time, we expected that restrictions would last a couple of weeks and then the whole ordeal would be behind us. Almost a year and a half later, we are staring down the barrel of yet another massive surge in COVID cases. The number of COVID cases are rising in every state in the nation, and in some places, in dramatic fashion. The first major surge that occurred in 2020 caused a series of dominoes to fall that impacted all aspects of our lives, including the real estate market. What lessons can we learn from the last year of the pandemic and what will this latest surge mean for home buyers and homeowners? 

Early Pandemic Impact on Real Estate Market

Many expected the pandemic and its resultant lockdowns to be a nail in the coffin for the real estate market. Experts predicted that lockdowns would result in unemployment skyrocketing, which in turn would cause millions to fall behind on rent and mortgage payments. In turn, renters would be evicted and homeowners would default on their mortgages, resulting in foreclosure. This would then flood the market with homes, which would crash home prices similar to what happened in 2008. This did not happen.

Instead of sitting back and letting the real estate market crash, state and local governments, as well as the federal government, jumped in with relief. The federal government passed eviction and foreclosure moratoriums, as well as forbearance extensions. Additionally, they provided stimulus checks to help Americans pay their bills. Millions of Americans did fall behind on their rents and mortgages, but the above measures prevented the type of market crash that was predicted.

Additionally, the Federal Reserve slashed interest rates, which in turn caused mortgage rates to drop to historic lows. Mortgage rates have hovered near historic lows ever since. Recognizing the value in low mortgage rates, home buyers leaped into action and caused a housing boom like we have not seen in decades. At the same time, many existing homeowners were able to take advantage of low mortgage rates and refinance their current home loans. This allowed them to decrease their overall loan amount, as well as reduce monthly payments. 

All of this flew in the face of the kind of real estate disaster that was predicted. Now that we are on the verge of another surge, what can we expect going forward? 

Mortgage Rates Will Remain Low

One consequence of surging COVID cases will be that mortgage rates will continue to remain low. Mortgage rates are not static and we know that they will not remain this low forever. In fact, we assumed that as states opened up and Americans went back to work that mortgage rates would begin to rise. After all, the Federal Reserve slashed interest rates to spur economic activity in spite of the pandemic. Now that cases are rising it is clear that the pandemic is not behind us. This is causing the Federal Reserve to balk at raising interest rates, which would also cause mortgage rates to rise. 

This is a great silver lining for home buyers and homeowners. Home buyers now have more time to buy the house of their dreams at rock bottom mortgage rates. Homeowners now have more time to refinance their current home loans and save money over the total cost of their mortgage. At the same time, there are a lot of indicators that housing inventory is increasing in the near future. Home listings are increasing in nearly every market and more home construction projects are starting all over the country. This puts home buyers in a fantastic position because they will have more options than before to buy a house even as mortgage rates provide fantastic value. 

More Rent and Mortgage Relief for Renters and Homeowners

Another consequence of surging COVID cases is that renters and homeowners can expect more relief from all levels of government. There has been much hand wringing over the fact that the federal moratoriums on evictions end in July. However, President Biden is now asking Congress to extend it further. Even if Congress does not act, many states have been putting in foreclosure and eviction moratoriums of their own. 

Aside from just moratoriums on evictions and foreclosures, government agencies are passing a slew of additional relief measures to stave off the worst consequences. The Consumer Financial Protection Bureau just released an online tool that will assist renters and homeowners in finding help. There are many programs available at the state and federal level to help renters pay back rent or homeowners to avoid foreclosures. This tool will help renters and homeowners identify these resources and take advantage of them. 

Additionally, new programs were announced for those with VA loans and FHA loans. Homeowners with VA loans can not apply for assistance or mortgage modifications to help get current on mortgage payments. First-time home buyers with FHA loans have created programs of their own to also prevent first-time homeowners from losing their homes. New relief measures seem to be passed nearly every week as governments are pulling out all the stops to ensure a collapse in the real estate market. 

Final Thoughts

The pandemic has lasted far longer than many of us had ever thought and it is daunting to think that we are in the midst of yet another surge. Thankfully, measures are being taken to ensure that the real estate market is safe and that homeowners will be protected even if things turn even more dire. While it is absolutely tragic that the pandemic is ongoing, we can take solace in the fact that there is at least a silver lining. Low mortgage rates will continue to provide opportunities for home buyers and homeowners to get mortgages on new homes or refinance their current home loans. It is a small consolation prize, but it is better than nothing.

If you are looking to buy a new home or refinance your current home loan, contact us. The team at Peoples Choice Mortgage can help you identify a program that is perfect for your needs and financial situation.