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2021 Housing Market Forecast, by Neil McCoy-Ward
New money creation
Low Interest Rates
Cash out refinancing
Forbearance, property taxes & Foreclosures
Interest rates rising
Jobs, Migration & remote working
New building permits
Social housing/ rent forgiveness. (You take from the landlords)
The FED wins (MBS acquisition)
SUMMARY: A HUGE HOUSING CRASH IS STILL ON THE WAY, but doubtful to occur in 2021 due to new money creation & incredible demand for housing
So the main thing to be aware of is that I do not believe we are going to see a housing market crash in the next 6 months in the USA, and that's the minimum.
1 Reason: Existing money creation is where the government issues bonds and borrow money from the current money pool. New money creation is when they go to the Federal Reserve to borrow money which did not exist beforehand. Think of it like this, imagine you have a glass of water and you borrow money from the people therefore reducing the amount of water, so prices stay the same. But this time, you add more water to the glass, therefore the volume of water has to increase. and this is the same principle with our money supply currently. The reason the housing market is so high and continuing to climb is because the Federal Reserve is propping up the prices.
Increasing the money supply like this simply steals from savers and our future because this causes something called inflation
One of the biggest concerns I have is for people that are saving large amounts of money right now in a savings account ready to purchase a property. or maybe those people have just sold a property and a holding that money they're ready to buy their next property. These are the people that are most at risk at present as housing prices are going up, at the same time the value of the money is going down due to inflation.
The Fed has openly said that they're not concerned about asset bubbles ahead. And my question would be why the heck not? Why would you not be concerned about asset bubbles when it's so clear the asset bubbles are forming. How else would the stock market be reaching all-time highs during a financial crisis. How else would the housing market be booming during a time when unemployment is the highest it's been in a long time? I mean am I the only person thinking rationally here.
Isn't it obvious what's going to happen when all of the stimulus measures end and this new stream of money that we are adding dries up.
Why also are house prices going up? Inventory, forbearance, interest rates, building costs have risen dramatically. New home building is also very slow at present due to the crisis, with a number of delays. As well as delays on getting materials. Supply chain disruption. Expect about 6 months before the next wave of new homes come to market (so with delays, roughly the Summer which will be peak time for the selling market). Houses are also selling twice as fast right now as they have done previously. This creates a buying frenzy with people paying over and above the asking price to secure the house.
Interest Rates: Expect mortgage rates to go up this year by about 1% or thereabouts, we could see a 2% rise, that’s also possible. It all depends on a number of variables that are outside the scope of this video.
Interest rates are going to stay low throughout the next year. Jerome Powell has already made it quite clear that he will not be raising interest rates any time soon. This gives us a clear indication that house prices will stay high through at least the next 6 months
The next thing is home value increases. Many experts and housing associations are predicting an 8% rise in 2021, however, I think it’s a lot more accurate to predict a month by month increase. Because we could see a crash later in the year, it's not certain.
Forbearance. We actually don't know how many people are simply not paying because they can't afford it, or simply not paying because they choose not to pay. We have roughly 2.8 million mortgages in forbearance, which is roughly 5.5% of ALL mortgages. Now this is and of itself isn’t enough to cause a housing crash, but it can contribute to one
This video is for entertainment purposes ONLY & designed to help your thinking, not direct it. These videos shall NOT be construed as tax, legal or financial advice and may be outdated or inaccurate; all decisions made as a result of viewing are yours alone.
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