A major problem exists for the housing market. Banks are moving to limit access to mortgages and products including home equity lines of credit (HELOC) as the pandemic decimates demand.
The housing market has been very robust in the United States as the Federal Reserve Bank has been buying mortgage backed securities (MBS) to support housing prices and as supply of new houses has been limited due to the pandemic lockdowns. Thus far, the combination of federal support and a real reduction in demand have kept the housing price stable.
A major problem for home buyers and the housing market occured during the Grat Recession of 2008. Big banks raised the bar for credit scores and down payments that disqualified all but the most qualified and the institutions from buying houses. This led to every day people being locked our of this important market.
As it stands, the housing market in America is likely in a bubble. Large coastal cities are losing appeal, and work from home policies allow high-paid employees to work elsewhere.
As the banks deactivate incentives such as downpayment assistance and HELOC, it will further add to reasons to avoid buying and selling. This could be very bad for the property market.
How does the real estate market look where you live? Do you plan on making any real estate transactions in the near future?
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Image from Pixabay.