Have you ever gone to the store and bought one shoe? Doubtful… I relate this to the saying, “when the other shoe drops”.
We are now 15+ months into this pandemic, with the first shoe being “COVID-19”, which hit the US as well as the rest of the world. With that being said, we now wait for the other shoe to “drop”.
The second shoe to drop will likely be the government exiting its ongoing financial influence and letting the free market take its course. This certainly needs to (and will) happen, but when and where will its impact be felt? Let’s look at some facts and statistics over the last 15 months.
Mortgages– The government imposed a rule on almost all real estate lenders/servicers stating they have to allow a client to enter a forbearance period in which they do not have to pay their mortgage. The resulting balance is subsequently tacked onto the end of the loan period. Millions of homeowners are currently taking advantage of this, some of which had no change or loss in income.
Rentals – Renters have many of the same protections or better, as well as some of the craziest laws that I have seen in quite some time. The COVID-19 Tenant relief act (AB-832) allows tenants to basically have their back rent forgiven as well as utilities if they fit into the “box”. (This is a big box!!)
What does all this mean to you? If you are looking to buy a home, you should expect plenty of inventory since some people have lost their high-paying jobs, along with many other factors that would force them to sell their homes.
If you plan on buying a home, you cannot just get fixated on the price of the home. The “wild card” in this case would be where the interest rates will be when you are ready to purchase. Just one of the many things to digest and consider when making one of the biggest decisions of your life.