The current market stall in response to COVID-19 presents a unique challenge for market tracking moving forward, and likewise for buyers and sellers trying to understand the housing market that they are walking into. Months’ supply represents the dynamic between listings and sales. As each side of the homebuying transaction responds distinctly to the COVID-19 situation, this dynamic shifts, and “buyer’s market” and “seller’s market” labels along with it.
So, will COVID-19 shift conditions to a buyer’s market, or a seller’s market?
On the one hand, the rate of new listings entering the market has gone down dramatically, adding very little new inventory to the national pool of listings. Likewise, there are fewer closed sales due to social distancing measures. The lack of new listings bottlenecks the potential of sales. If the downturn is roughly equal in listings and sales, then months’ supply as a metric would continue its current trend.
However, as the market resets and picks back up later in the year, listings and sales will likely ramp up at different times, which will have distinct effects on this buyer/seller relationship. As listings reach a critical mass to entice prospective buyers, this accumulation of listings will drive up months’ supply figures, temporarily shifting us to a buyer’s market. Then, as the rate of buyers catches up to listings, this sales and listings dynamic will continue to balance out. Where it ends up at the end of the year, however, remains to be seen.
I’m worried about my credit score. What should I do if a miss a few payments due to the crisis?
The CARES Act implemented provisions to protect credit scores from January 30, 2020 through 120 days after enactment of the national emergency. If customers are making payments, or made arrangement to not make payments, customers must be reported as being current. If a customer was delinquent, but was able to make an arrangement with the servicer and is now current, then their account must be reported as current. The important thing is to reach out to your servicer, bank or credit card company if you are having trouble making your payments.
I have heard that the FHA, Fannie Mae, and Freddie Mac have raised rates and fees on borrowers with lower credit scores or smaller down payments?
Fannie Mae and Freddie Mac have not made any changes to credit scoring or down payment requirements. The only change they have made for borrowers is to allow MORE flexibility in how a lender can verify employment. Many individual lenders are adding their own, higher standards on these products. The rational is that the cost of servicing these loans has surged due to the widespread forbearance that is taxing servicers’ resources. Under forbearance, the servicer must continue to pay PITI to the investor, but the sheer volume of forbearance to deal with the COVID-19 response is unprecedented. Since lower-credit borrowers are more likely to take forbearance and servicing is harder to get, lenders are less willing to extend this credit regardless of the FHA or GSEs’ standards.
I’m not sure I will be able to pay or file my taxes on time for 2019; What do I do?
The IRS has delayed the due date to file and pay any taxes that are due to July 15, 2020, without penalties or interest. For more IRS information, check here.
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