My newest piece for BiggerPockets asks if we are in a recession and probably a bad one, why are real estate prices still rising?
The early data that came out right as the pandemic was starting to hit the United States were also misleading. Properties are usually under contract for at least 30 days before closing. Thus, the sales data from March came from properties with contracts signed in February, when COVID-19’s impact on the U.S. was minimal and many doubted it would become a serious problem.
But more importantly, there are two major reasons that real estate prices continue to rise:
[Unfortunately it probably won't last] ...it takes a long time for a default to become a foreclosure and for those foreclosures to begin dragging down the housing market. By some early (and in my opinion, overly pessimistic) predictions, mortgage holders are bracing for up to 15 million defaults.
While the number likely won’t be that high, it will still be high. Yes, inventory will remain low, but as people go into default or simply need to move, large numbers of properties will eventually hit the market. With reduced demand, this will put downward pressure on housing prices.
"Every day is a new life to the wise man."
The Righteous Mind
Star Slate Codex
Consulting by RPM