To have an informed opinion, I believe one would need to look at many factors. Let’s start with the current delinquency rates:
As a whole, I would say these numbers are extremely encouraging, but what about all the people that are out of work due to the pandemic?
Jobless claims are up and as of the writing of this article up to levels not seen since October 2021. Omicron is likely the culprit which looks to be running parallel with unemployment. But these areas are expected to improve once omicron runs its quick course.
Remember the pandemic relief fund for those renters and landlords mentioned last month. Well, $5.2 billion in funds has been exhausted. This poses a serious issue for those who are still unable to make rent especially with the tenant protection expiring this March. California requested an additional $1.9 billion from the Federal emergency rental assistance program, but have only received $68.7 million in additional funds. The state estimates the program has helped 250,000 families, but more are in need.
Inventory – now that hasn’t changed much. The median days on market for our Redlands area is 49 days. Median list price $849,800 ($364/sq. ft.), and appreciation is still in the double digits.
Could inflation cause the downturn? Sure, inflation weakens the dollar, so you will need more dollars to acquire the same good. But wait, wages are increasing as well. Yes, but let’s look at the numbers. Inflation is currently at 7% and real wages are increasing at 2%. So the net result is a loss of 5%. So your $100 this day last year is now worth $95 in the marketplace today. This means as time passes, you will need to spend a larger portion of your earning to make your house payment, buy groceries and pay those constantly rising energy bills. But let’s face it, that may slow the appreciation of home values, but it won’t cause a collapse of the housing market.
OK, so that’s a lot of data, what are we to make of it.Well, that’s an opinion piece and always fun to chat about. But from my chair, I would say:
Inventory remains low, jobs are very much available, but the unemployment rate is low, mortgage delinquencies are low and improving, omicron is soon to pass (Great Britain removed their mask/vax mandates as have other countries, hopefully we are right behind them) and home appreciation in the past 2 years has people sitting on massive amounts of equity. But what about the homes that can’t make their payment? Now THAT is a problem! However, in reference to a foreclosure – the home owner can choose to sell and make money, even if they are way behind in receiving rents or making their mortgage payments. I would say, just from the data – we haven’t any chance of a bubble burst like 2007-2010. That was due to loose lending guidelines and laws. Mortgage financing now is extremely tight and will not be the cause of a meltdown anytime soon.
Please let me know if you have other facts that should be considered. I welcome any opinion.
To have an informed opinion, I believe one would need to look at many factors. Let’s start with the current delinquency rates:
As a whole, I would say these numbers are extremely encouraging, but what about all the people that are out of work due to the pandemic?
Jobless claims are up and as of the writing of this article up to levels not seen since October 2021. Omicron is likely the culprit which looks to be running parallel with unemployment. But these areas are expected to improve once omicron runs its quick course.
Remember the pandemic relief fund for those renters and landlords mentioned last month. Well, $5.2 billion in funds has been exhausted. This poses a serious issue for those who are still unable to make rent especially with the tenant protection expiring this March. California requested an additional $1.9 billion from the Federal emergency rental assistance program, but have only received $68.7 million in additional funds. The state estimates the program has helped 250,000 families, but more are in need.
Inventory – now that hasn’t changed much. The median days on market for our Redlands area is 49 days. Median list price $849,800 ($364/sq. ft.), and appreciation is still in the double digits.
Could inflation cause the downturn? Sure, inflation weakens the dollar, so you will need more dollars to acquire the same good. But wait, wages are increasing as well. Yes, but let’s look at the numbers. Inflation is currently at 7% and real wages are increasing at 2%. So the net result is a loss of 5%. So your $100 this day last year is now worth $95 in the marketplace today. This means as time passes, you will need to spend a larger portion of your earning to make your house payment, buy groceries and pay those constantly rising energy bills. But let’s face it, that may slow the appreciation of home values, but it won’t cause a collapse of the housing market.
OK, so that’s a lot of data, what are we to make of it.Well, that’s an opinion piece and always fun to chat about. But from my chair, I would say:
Inventory remains low, jobs are very much available, but the unemployment rate is low, mortgage delinquencies are low and improving, omicron is soon to pass (Great Britain removed their mask/vax mandates as have other countries, hopefully we are right behind them) and home appreciation in the past 2 years has people sitting on massive amounts of equity. But what about the homes that can’t make their payment? Now THAT is a problem! However, in reference to a foreclosure – the home owner can choose to sell and make money, even if they are way behind in receiving rents or making their mortgage payments. I would say, just from the data – we haven’t any chance of a bubble burst like 2007-2010. That was due to loose lending guidelines and laws. Mortgage financing now is extremely tight and will not be the cause of a meltdown anytime soon.
Please let me know if you have other facts that should be considered. I welcome any opinion.
With 20+ years of experience, we created these to help all those who are looking to buy, get financing, and/or sell their homes. These are free and ready to download at the click of a button! Choose a packet to get yours today.
