We find ourselves in the middle of January 2021, already. Politics is still front and center in the headlines, as well as the stimulus package, and the pandemic& vaccine distribution. Through it all, Orion continues to help our brokers help your borrowers achieve the dream of home ownership, or save money through refinancing with us. Our management and AEs are occasionally asked, “How might a vaccine being made publicly available impact the housing market?” No one has a crystal ball, but we do have some useful thoughts about what you can tell your clients if asked.
First, the United States has lost over twenty-two million jobs since the start of the pandemic across various sectors impacted by restrictions and shutdowns, though housing has remained a bright spot. People still need a roof over their heads, and our brokers are seeing plenty of people in their 20s and 30s seeking a home rather than a rental.
The strong possibility of a vaccine being made available by, or before, the spring (though once again it seems that the distribution is subject to political moves) beckons the possibility of a boom in employment, consumer spending, the economy, and likely a rise in prices. Rates move up when the economy is growing, or expected to grow, and vice versa. With the expectation of “normal” returning to the economy, upward pressure may be put on interest rates, including mortgage rates. Historically low rates have had an impact on the housing markets: despite the pandemic and tens of millions of Americans being out of work, home sales were up this year from July, August, and September 2019 by 8.7%, 10/1% and a massive20.9%, respectively.
Those low rates have enabled more buying power for home seekers, which will begin to evaporate if rates rise. That, along with increasing forbearances, delinquencies foreclosures are some upcoming headwinds for the housing market. And we’ve indeed seen rates creeping slightly higher in recent weeks as investors and analysts continue talking about another stimulus package, given a Democratic majority in the government.
That said, your clients, who you have helped, know how wonderful it is to own a home. Ownership is still the American Dream, and Orion is here to help our brokers help your clients.