Great news for real estate investors. According to a Reuters poll, U.S. home prices will defy the current economic downturn and ride out the storm, supported by record low mortgage rates and limited supply. The poll showed housing outpacing consumer price increases this year and next.
The U.S. housing market is expected to remain a sharp investment amidst a strong economic downturn; housing prices are expected to rise 3.0% this year and next. The forecast is incredibly upbeat, considering the economy is taking its worst hit on record and unemployment has soared to levels not seen since the Great Depression.
The coronavirus pandemic is currently wrecking economic havoc throughout the world, forcing businesses to close and unemployment numbers to reach astronomical highs. The pandemic has so far infected more than 2.2 million people in the United States, claiming around 120,000 lives, while infections are continuing to rise.
The U.S. Federal Reserve’s median projections expect consumer inflation of 0.8% and 1.6% this year and next, which puts mortgage rates at record lows and a persistent undersupply of homes. Tight inventories are expected to be squeezed even harder after construction was forced to pause, when much of the U.S. economy was on lockdown to reduce the spread of the coronavirus.
Currently, the main threat to the U.S. housing market is high unemployment rates, which jumped from record lows to record highs within a few months. Fortunately, most of the unemployed were not existing homeowners looking to buy a home before the pandemic hit. Also, the very low mortgage rates makes buying real estate an attractive opportunity for many who are not struggling.
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