Experts Predict a Huge Housing Crisis Because of THESE 6 Reasons
The risk of getting sick isn't the only thing you need to be worried about during the COVID-19 pandemic. Another major problem is the virus' effect on the housing market. There are several potential problems happening all at once, and some housing experts think we're on the brink of a major housing crisis.
1. At-Risk Groups Are The Ones Most Affected by The Pandemic
Of course the first issue is that a huge segment of the population are currently out of a job. Hourly wage workers are often employed at places like restaurants, bars, and stores, and these are the segments most affected by coronavirus lockdowns.
Sadly, the groups more likely to be out of work are the ones with the least amount of savings according to a Federal Reserve Survey. A huge percentage of Americans live paycheck to paycheck, relying on service industry and hospitality jobs to pay rent or mortgage.
Without these funds, many lower class Americans are left unable to pay their bills. Meanwhile, white-collar workers who often have plenty of savings are still able to keep working because their industries can easily transfer to remote work.
2. Everyone's Getting Evicted at Once
The federal government froze evictions a few months back. The freeze was just extended for a little while longer, giving people more time to catch up on their bills.
On the surface, this might seem like a good thing. However, it's also going to have the unfortunate effect of resulting in a wave of evictions. When the freeze on evictions is finally over, landlords are going to rush to get non-paying tenants out of their properties.
This will result in thousands of people all homeless at once. The huge influx is predicted to overwhelm more affordable housing options.
3. Current Housing Programs Are Already Overwhelmed
Normally, if you get evicted and need affordable housing fast, there are various programs that can help you out. With the massive number of people struggling, these programs are working overtime.
Right now, they are rushing to find housing for homeless people, so the nation's large homeless population will have a safe place to stay. This means that once the eviction and mortgage freeze is over, a lot of the low-cost housing will be filled up.
4. New Affordable Housing Projects Are Put on Hold
With all the economic uncertainty of the pandemic, development is on hold in many areas. Though most developers are finishing up projects they have already started, most are putting their future plans on hold.
That's bad news for the many regions without affordable housing. In the past few years, there has been a big problem with cities only building luxury condos and high rise apartments. Many regions were just starting to address this problem, discussing the idea of building some affordable housing options.
These plans are getting put on hold in many spots, so those who need affordable housing will have to wait a while longer.
5. Lenders Are More Strict About Giving Out Mortgages
Those looking to move beyond renting are also going to face some challenges when they start looking for a home. Most lenders are no longer handing out mortgages to anyone.
In times of economic uncertainty, banks typically respond by putting tighter requirements on loan applications. If you want to get a loan, you will need to be prepared with good credit, a regular job, and a decent amount of savings.
For some, these new regulations may mean that their dream of home ownership will have to be put off. This will lead to more people renting, making it even harder to find a supply of affordable housing.
6. The Number of Homes for Sale Is Shrinking
Another problem that may be worsening the crisis is the decline in housing market options. Many sellers are worried about the pandemic, so they have decided to delay selling their homes until things stabilize.
All over the nation, the number of homes on the market has dropped heavily. With more people than ever desperate for a home, this is leading to bidding wars that can drive a home's price up.
Those looking to purchase a house for the first time might find it harder to break into the market. Until more options come on the market, it might be harder for people to shop around for good deals.