The Housing Market in 2020: Why Selling is Difficult and Getting Worse

Many people still are not aware that, after ten years of rebounding from the great recession (2007-2008), real estate has been noticeably dropping since October 2018.

Long before the effects of COVID-19 started tearing the World’s economies apart, recession was predicted for the 2nd quarter of 2019, which was over a year ago. There was a pent-up urge for the market to dive into recession, and now, a year later, recession is here, Coronavirus its catalyst.

Continual, alarming news about the economy and real estate comes from many reliable sources such as the Association of Realtors®. The California Association’s Market Minute report reveals some dreadful points.

As this report mentions, interest rates are close to record lows and mortgage applications for new purchase applications remain 10% below from the level recorded the same week of last year. One thing to take note of is that new refinancing applications remain at 201% higher than last year. What the report does not show is how many of those refinance loans are not getting approved and becoming closed transactions.

This is important because some areas of the country where property values are higher than average, such as where I am in the San Francisco Bay Area, usually depend on what are known as jumbo mortgages.

These jumbos are home loans that exceed the conventional lending limits of government-backed mortgages that are purchased, guaranteed, or securitized by the Federal National Mortgage Association (Fannie Mae) or Federal home Loan Mortgage Corporation (Freddie Mac). The conforming loan limits are set by Federal Housing Finance Agency (FHFA) and are currently max out at $510,400 or higher ‘Conforming’ Jumbo loans  in high-cost areas like counties around San Francisco Bay. Unfortunately, these and normal conventional purchase and refinance loans are not being approved at this time because of the instability of economic conditions.

The primary lender of these loans, Wells Fargo, recently posted these two statements:

NOTE: Due to the current environment, some loans including jumbo refinances may be temporarily unavailable.

NOTE: Due to the current environment, some loans including cash-out refinances may be temporarily unavailable.

What this all means is that those who want to refinance or even sell to someone else are stuck with their homes because of the unavailability of these loans and the lack of other funding sources.

One thing to be aware of and understand is that buyers with extremely high credit scores and substantial down payments might still, at least for a very short window, receive financing.

Also be aware that loan approvals do not necessarily mean that the transaction will close. “The mortgage broker community has seen a rash of loans that were previously approved get denied due to newly added lender overlays”, says Richard Liu, a mortgage consultant for C2 Financial Corp., a San Diego-based mortgage brokerage. “Overlays are additional criteria on top of conventional and government lending guidelines.” Read more here.

“Contrary to what some of the media is reporting, rate quotes should be taken lightly as the volatility in the secondary market is like we’ve never seen,” Liu says.

Now the fear is a second wave of Coronavirus that could cause an even worse economic disaster.

This is NOT a normal recession and will not be a normal 1- or 2-year recovery!

Searching for Solutions:

Most logically, people turn toward real estate agents. However, most agents have never experienced any recession. Those few that have, only know traditional methods of listing, selling, or renting properties. These customary methods will not work very well in this economic environment. I know this because I have been a very active real estate broker for over 30 years. I’ve trained thousands of agents and understand how agents really work.

Even of those agents that I’ve trained, very few became familiar with creative strategies to help their customers and clients. Smart agents realize this and turn to Property Assistance Realty Trust for results.

When Agents are not able to sell properties using traditional means, listing inventory increases. High inventory equates to a ‘Buyer’s Market.’ In most dropping markets, sharp investors keep buying, however because of today’s unhealthy markets, savvy investors are more cautious. This means that owners will have to hold property until the after recession – and it is very likely that recovery will take many years.

Here at Property Assistance Realty Trust, offers solutions by referring to and coordinating with Private Trusts that can help people who are having difficulties with real estate. These Private Trusts partner with or acquire properties from people who are leaving the U.S., or are in pre-foreclosure, who have vacant or inherited properties, have tenant troubles or most any other real estate-related difficulty.

To learn more about this and how we can help you or someone you know go to:

I’m here to help you to fulfil your dreams & goals,

So, I’ll See You Over the Top!

– Alan David Kosinski, Life Extraordinaire

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In each future article I’ll take you closer to more abundance through empowering and educational articles. Until then, see if you can discover ways to immediately implement what you learned from today’s message.

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