in this video i'm gonna be discussing
whether or not you should be buying a
home in 2020...
in the middle of a recession. And no i'm
not just talking about interest rates,
I'm actually going to be breaking down
the top eight home buying considerations
you should be thinking about
right now! Let's get to it.
What's going on good people and welcome
back to another video by Black Swan Financial.
So if you're watching this
video you're probably
here because you're curious about
whether now is a good time to buy a
house or not.
Well you're not alone just like you my
wife and i have been thinking about
buying a home for several months and I'm
gonna break down the top eight
home buying considerations that you
should weigh before kickstarting your
housing search. Now even though i said
eight home buying considerations be sure
you watch all the way to the end because
I'm going to throw in
a bonus tip and you want to make sure
that you don't miss out.
So here are the eight things that you
should consider and all these eight
things fall into three broad buckets
CHEAP MONEY,  TROUBLE FOR SELLERS & BUILDERS and DOWNWARD PRESSURE ON HOME PRICES
By now I'm pretty sure you've heard some
chatter about how low mortgage interest
rates are,
but just how low are rates right now?
Well according to data from the Federal
Reserve
the average interest rate on a mortgage
across the united states is the lowest
it's been in the past 30 plus years!
The average rate on a 30-year mortgage
has been declining since the 1980s
and right now they're down to 3.07
as of june 2020, which means as long as
you can qualify for a mortgage
there's cheap money out there.
Existing Home Sales Report
Median prices on existing homes have
actually increased
2.3% since May 2019. However,
if you look at the number of homes sold
they're actually down
26.6% versus the same period last year
To put things into context at the start
of the last recession in May 2008
sales were only down 16.6 percent versus
the same period
in 2007. So this is already worse.
Also, if you look at May 2009 about one
year after the start of the 2008
recession
prices were down a whopping 21.5
percent! So why should you care about the
existing home sales report
well because it means less homes are
selling, which means less buyers,
and for you less competition and most
importantly
recent history shows that within the
next 12 months
PRICES are LIKELY to DROP  SIGNIFICANTLY
The Pending Home Sales Report
Luckily we
also have a forward-looking indicator
and it's called the Pending Home Sales
Report which is based on contract
signings.
So basically it gives us an idea of what
homes have gone under contract
and expected to close in the next couple
of months. Year-over-Year
Pending Home Sales are, you guessed it
down
5.1 percent.
Consideration number four
the Housing Starts Report
If you're interested in purchasing a new
construction home housing starts is
something you definitely want to keep an
eye on
because home builders use this as a
gauge for the market appetite
for their new construction homes.
Basically it's a gauge for when the
excavation starts for the foundation of
a new home.
When housing starts are down, home
builders see this as an indicator of
less demand for their product which
potentially means
you could see some discounts, some design
incentives,
or perhaps zero lot premiums
So to put things into context in may
2020 when the economy started to reopen
housing starts were down 23.3 percent
versus 2019.
Now if you compare that to what happened
during the 2008 financial crisis
you'll see that we're almost spot on to
where things were at the same period
during the start of the 2008 financial
crisis
Which in my opinion means that things
are only going to get worse
given that unemployment is already more
than 300 percent
worse than it was during the last
recession
the peak of the last recession.
This month the additional $600
of weekly unemployment benefits are
scheduled to end and why does this
matter to the housing market?
Well for a couple of reasons.
Once it happens that means
less monthly income for homeowners that
are unemployed making it harder for them
to stay
current on their mortgage payments.
Secondly, it means the unemployed will
spend less money in the economy which
means less
money for businesses and potentially
more
unemployment.
The end of the federal
moratorium on evictions
One of the little known facts about the
CARES Act is that it provided not only
360 days
mortgage forbearance but also a
temporary freeze in all rental evictions
if the property
is federally subsidized or if the rental
home is financed with a
FHA (Federal Housing Authority)  loan.
Remember back during the 2008
financial crisis
remember how long it took for some
people to find a job, over a year
well this time around what do you think
will happen to all those people
that lost their jobs in the service
industry
Sadly it's probably going to take them a
very long time to get back on their feet
in some instances even longer than a
year which means come April 2020 when
the mortgage forbearance ends
will likely see a flood of foreclosures
hit the market.
So if you're looking for the best deal
on an existing home come early next year
there'll probably be some bargain prices
available
it also means that the rental evictions
is something to keep your eyes on
because that can negatively
impact neighborhood home prices.
And now
for our final consideration before we
get to our bonus tip.
Remember all those companies that got
the bailout the Payroll Protection
Program
well as part of the terms they have to
keep their employees until the end of
september September 30th.
But that doesn't mean that they're
waiting until September 30th to give
layoff notices.
Actually a number of them have started
giving layoff notices
effective October 1. Sadly, that means
some folks with conventional mortgages
will fall behind on their mortgage
payments
and the rise in unemployment will
probably affect the new home
construction market.
And now for our final bonus tip remember
the CAREs Act mortgage forbearance program
that we talked about
well it doesn't apply to homes finance
with a conventional mortgage
So if you're looking to buy a house
before March 2021
when the CAREs Act mortgage forbearance
program ends
you may want to consider holding out for
foreclosure
a foreclosure on a home finance with
a conventional mortgage.
Well that does it for this video if you found the information helpful please
go ahead and smash that like button and
give us that thumbs up and don't forget
to subscribe it definitely goes a long
way to supporting the channel
Also i want to hear from you what
questions have come up during your
housing search feel free to go ahead and
leave me a comment down below
and i'll try to answer those as soon as
i can thanks for tuning in
see you next time
