The current COVID-19 pandemic has urged many real estate investors, agents, and other professionals to talk about a potential US housing market crash 2020. While the health crisis and impending economic recession are affecting buying and selling real estate in major ways, are a housing bubble and a housing market collapse also expected? In this article we will take a look at the main real estate market trends in 2020 and the major housing market predictions for the rest of the year.
To avoid keeping you in suspense, let us tell you right away that the answer is: “No, the US housing market is not forecast to crash in 2020”.
You can also watch our most recent real estate video on the topic below:
Not an Inherent Housing Crisis
The most important reason why a US housing market crash 2020 is not expected to happen is that the ongoing crisis is not a real estate problem. In other words, the cause of the troubles in the US real estate market is exogenous. It is the health crisis, safety situation, economic worries, and shelter in place policies which are driving the slowdown in real estate buying and selling activities.
Actually, the US housing market was in a very healthy and stable position coming into 2020. The vast majority of the US was and remains a seller’s market. At the beginning of the year, home values were forecast to continue going up at a reasonable rate which would result in a good real estate appreciation without causing fears of skyrocketing real estate prices and an emerging housing bubble.
All in all, there is nothing wrong with the US housing market 2020, which makes a crash very unlikely.
No Sudden Property Price Drop
Another reason to expect a negative answer to the question “Will the housing market crash in 2020?” is the fact that the pandemic did not cause a downward home prices plunge.
Activity in the US real estate market declined as soon as homeowners and home buyers as well as real estate investors started fearing for their health, safety, and financial stability. Fewer property owners are listing their home for sale, and fewer people are looking to buy a home or an investment property. This is only a natural reaction to a crisis like the one caused by the Coronavirus pandemic.
However, a positive indicator in this regard which shows that a US housing market crash 2020 is unlikely is the fact that real estate values have not experienced a major decline as a result of the pandemic and the slowdown.
There was a major difference in how the stock market and the housing market reacted to the crisis. As soon as the pandemic started reaching the US, the stock market took an immediate downward dive and neared a crash. While stock market predictions are significantly less positive, real estate trends demonstrated a stability and resilience which makes the 2020 predictions for the housing market much more optimistic.
Short Term Impact on Real Estate Activities
To refute the impact of the Coronavirus on the US real estate market is naive, to say the least. Buying and selling real estate has become not only more challenging because of the restrictive policies to keep public safety but also significantly less frequent.
Nevertheless, the effect of the pandemic on the housing market 2020 is expected to be only a short term one. Real estate investors, home buyers and sellers, and real estate agents are all demonstrating eagerness to reenter the market as soon as things start going back to normal and restrictions are lifted.
It will most probably take no more than a few months to go back to where the real estate market was before the COVID-19 outbreak.
Varying Impact by Location
The current Coronavirus pandemic is demonstrating once again that location is a crucial indicator in real estate, whether buying a home or investing in rental properties. Major US cities like New York, Seattle, Los Angeles, and Chicago have been affected disproportionately high by COVID-19 compared to smaller real estate markets. Consequently, the response of different housing markets to the pandemic has also been varying, depending on the severity of the health and economic crisis.
This reality means that it is unreasonable to talk about an overall US housing market crash 2020. Even if housing prices are somewhat falling and real estate activities have been brought to virtually zero in certain locations for the moment, other areas are still doing well.
Is It a Good Time to Buy a House?
Actually, all indicators are pointing into the direction that 2020 will be the best time to buy a house. As soon as the crisis starts subsiding and stay at home policies are lifted, it will be the ideal time to buy a home and invest in real estate.
First of all, although it is an exaggeration to talk about a US housing market crash 2020, there is definitely a decline in property values at the moment. Property prices are expected to reach their lowest level at the end of the pandemic, before starting going up again. As a result, investing in real estate and buying rental properties will become as affordable as it is expected to be in the next few years. Moreover, many property owners will be eager to sell after being unable to do so over the past months. Savvy investors should get a hold of the best real estate investment tools which allow them to conduct neighborhood analysis and rental property analysis quickly and efficiently to locate positive cash flow properties with a high rate of return right away.
Yet another reason why the second half of 2020 will be the best time to buy an investment property is the mortgage rates forecast. Recently the Fed announced a 0% interest rate. While this does not mean 0% interest rate on mortgage loans, it does mean that mortgage rates are at a historically low level at the moment. Importantly, mortgage rate predictions in the US housing market 2020 are for interest rates to remain lower than what they have been in recent years.
This makes real estate investments even more affordable. Indeed, 2020 is the best time to get into real estate investing as even beginners will be able to afford buying a rental property. Actually, the US real estate market is opening for a whole new segment of property investors, led by lower property values and mortgage rates. Thus, as soon as home values reach their lowest levels towards the end of the pandemic, beginner real estate investors should be ready to buy a traditional or Airbnb rental property, while interest rates are still minimal.
All signs are showing that a US housing market crash 2020 is improbable. To the contrary, the second half of the year and the beginning of 2021 are expected to be the perfect time to start a real estate investing business or expand your rental property investment portfolio. To get access to all the tools which you need to find profitable traditional and Airbnb rental properties in any US market, sign up for Mashvisor now.