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How Will Housing Markets Fare in the Impending Economic Slowdown?

The year 2020 began on a high note for mortgage companies, mortgagors, and homebuilders. As Reuters announced in November 2019, the industry is expecting homebuilding in the U.S. to increase steadily through 2020. They also noted that industry regulators issued more permits for home construction now than they ever did in the last year. That is very positive for homebuyers as they will have more options from which to choose. Additionally, mortgage rates have remained low, which makes for most of this boost in the housing industry. Prospectively, this positive trend in housing and mortgage markets in the U.S. should continue to 2021.

How Reassuring is This Trend?

Multi-family housing is among the most volatile sectors in the markets. Yet, even this sector has had consecutive months of increased activity. Housing starts, in general, also peaked with developers tabling more units this past year than the previous one. However, as a reputable mortgage company in Tempe notes, single-family units are fast becoming the go-to option here. While there still is the word of an impending recession, millennials seem to be gravitating toward property investment while they still are in their prime. From that, the housing industry experienced the highest number of units in over a decade. And, the rate is quite promising this year, through to 2021, as economists expect millennials to keep investing in the industry, and wealthy baby boomers amassing properties.

Regaining and Maintaining Momentum

Homebuilding confidence took the highest leap since mid-1999. That, primarily, has been as a result of the U.S. Federal Reserve cutting interest rates for three consecutive times. Mortgage rates, therefore, dipped, allowing potential homebuyers the flexibility and convenience of buying a mortgage that they could afford. That attracted more homebuilders to start and others to restart their businesses to meet this increase in housing demand. Builders are, however, facing the risk of underbuilding, which may disrupt the momentum at which housing markets are moving.

Among the most critical impeding factors here is the limited availability of bare land on which to build new houses. Also, there being limited skilled and experienced human resources for the actual construction is affecting the rate at which homebuilders can complete building projects.

The Issue of Mortgages


Without a doubt, the idea of mortgage loans being low has encouraged more people to invest in property. Though having increased slightly, even thirty-year FRMs are way below their peak; thus, encouraging long-term property investing. News of there not being a possibility of further cuts has, however, had mortgage providers consider backing up their rates. That, though, could not take effect as the Central Bank indicated that borrowing costs remain unchanged through 2020. These changes have had a near-no impact on adjustable mortgage rates as they are mostly dependent on credit markets and the lender’s base rate.

What Will These Mean to You?

Real estate investments will yet again be a viable investment option through this year to 2021, affirms a reputable Tempe-based mortgage company. Therefore, whether you are considering single- or multi-family home building, you can bank on the much support the housing industry is receiving from all ends. And, that includes from the Fed, mortgage lenders, homebuilders, and even you. You are in good hands.

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