The State of Housing Mid-Year 2021

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2020 was an unprecedented year for many unfortunate reasons, and those ups and downs have extended through 2021 so far. But one area that is the subject of much confusion and misconception is the housing market. Sure, we all pay close attention to home appreciation rates and sales prices, but today, I wanted to dig deeper.

 

We’ve certainly never seen this combination of mercurial conditions, with home prices exploding across the country, record-low interest rates, a boom of buyer demand met by a profound supply shortage, and more.

 

Through it all, pulling the strings to try and keep the show going has been the government, with a floodgate of stimulus, manipulating the dial on rates and regulations, and even instituting moratoriums on rent evictions and more.

 

To counter this confusion and accurately map the topography of an unprecedented period, we wanted to check in with some cold, hard facts, stats, and data about the housing market.

 

  1. Is there a massive wave of foreclosures about to happen? A June 22 article in Forbes with the headline “8 Million Households Face Foreclosure Or Eviction Next Week” caused a bit of a raucous (as the media is apt to do).

 

  1. But, in this case, there is reason for concern on face value. For instance, the 150-day mortgage delinquency rate is 6.6%, which is up 2.9% from this time in 2020 and the hi9ghest level in two decades.

 

  1. Digging deeper into this audacious mortgage delinquency number, we see this distribution:

 

  • 1.6% 30-59 days delinquent
  • 0.8% 60-89 days delinquent
  • 4.3% 90-days delinquent

 

  1. Research by Harvard University reveals that at least 2 million homeowners are now behind in paying their mortgage, with many in forbearance.

 

  1. Speaking of forbearance, is there a massive number of mortgage borrowers currently in forbearance? The number of mortgagees in some sort of forbearance skyrocketed in May of 2020 to a peak of nearly 7% of all single-family mortgages, or 3.4 million homes.

 

Since then, it’s gradually followed a downward trend to 5% in February of 2021

 

  1. However, that decrease my slope back up soon as up to 1.7 million homeowners see their current forbearance plan expiring in September of 2021.

 

  1. So, what should our level of concern be? According to Frank Martell, president and CEO of CoreLogic, “Forbearance programs continue to reduce the flow of homes into foreclosure and distressed sales and have been the key to helping many families who have been particularly hard hit by the pandemic. Even though foreclosure rates are at a historic low, the spike in 150-day past-due loans points to bumpy waters ahead.”

 

  1. At the end of Q1, the U.S. homeownership rate is 65.6%. That’s lower than the all-time high point of 69% in 2007, but a marked increase since even five years ago. It’s also hasn’t changed a whole lot since the 65.3% homeownership rate this time in 2020, nor the 65.8% we saw in Q4 of 2020.

 

  1. The seldom-reported homeowner vacancy rate is only 0.9%, which is incredibly low and .02% less than this time last year (1.1%).

 

  1. Of all housing units in the U.S., 58.3% are owner occupied and 30.6% are rental households (the large shortfall includes institutional and care settings, seasonal properties, as well as vacant homes).

 

  1. Now that we’ve talked about homeowners, how many renters are faring? Not so well, as approximately 6 million renters are currently behind on their rent payments.

 

  1. The rental vacancy rate is now 6.8%, which has only nudged up since the 6.6% vacancy rate this same time in 2020.

 

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In summary, a strong economic recovery, record homeowner equity, and historically low interest rates will all buffer the blow from the significant number of Americans who are behind on their mortgage or rent. Government relief programs, a willingness to work out solutions, and stimulus aid further soften the blow.

 

So, we don’t expect a large number of foreclosures and certainly no where even remotely close to the last housing crash in 2008.

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