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A new report from Fannie Mae, FNMA, +1.57% projects that home sales by owners will fall by nearly 15% in 2020. Driving that decline will be a downturn in existing home sales by owner, which Fannie Mae expects will drop to an annual rate of 4.54 million units, down from 5.34 million in 2019.
Issues with both supply and demand will contribute to the decline in home-buying activity. On the demand side, the rapid rise in unemployment because of the coronavirus pandemic and because of the stay-at-home orders will curtail many Americans’ ability to afford a purchase as big as a home.
Home sellers are also pulling their homes from the market. “On one side, the number of listings is falling, as sellers with homes to offer may worry that the lack of demand is placing downward pressure on the sales price they might otherwise receive,” Fannie Mae chief economist Doug Duncan said in the report.
The housing industry was in a strong position at the start of the year. However, the one thing many economists agreed would lower the growth in sales was the supply of homes. In the years following the Great Recession, home-building activity did not keep pace with the creation of households. In turn, it has left a significant gap in the marketplace.
As a result, economists had expected that the low number of homes on the market would prevent buyers from finding a property to purchase that they could afford. Would-be home sellers pulling their listings may increase this issue. On the other hand, buyers in the market might have more luck as a result of the decrease in demand, fueled by the flailing job market.
And how do these statistics affect you as a seller? Sellers don’t necessarily need to worry about lower prices if they do put their home on the market, according to Fannie Mae. Fannie Mae is still projecting the median price for an existing home to rise to $275,000 in 2020 from $272,000 last year. The median price for a new home is expected to increase to $326,000 from $321,000.
Fannie Mae projects there will be $1.41 trillion dollars in refinance loans originated in 2020, up from $1.01 trillion last year. Underwriting is more stringent but mortgage companies continue lending. The good news for future home buyers and sellers alike is that the situation in the real estate market is expected to improve next year, according to Fannie Mae. The mortgage giant currently expects the U.S. economy and home sales by owners both to rebound in 2021. That rebound obviously depends on the pandemic’s duration.
Keep in mind that here at GL&L Holdings, LLC we’re still lending funds and we can help you analyze your real estate investments. We also can help you determine how you can leverage our funds to create a higher net worth. Providing private loans to real estate investing developers in Houston, Texas equips you, as the investor, with the ability to gain better returns in a shorter period. Especially, when compared with other types of investing. Call us today to discuss your lending needs.