Founded over two decades ago, Rapid Response Mortgage Services is a full-service mortgage brokerage firm committed to providing you with honest, dependable and successful mortgage solutions.
The importance of homeownership comes from financial knowledge; it’s what turns renters into homeowners and, potentially, homeowners into real estate investors.
Low Rates Continue to Bolster The Recovery
There have been plenty of negative headlines this year -- COVID-19, recession, civil unrest, and more. The one constant positive throughout the majority of 2020 has been the lowest interest rates in history. These historic low rates continue to support the recovery from this COVID-induced recession. The beneficial effects of low rates can be seen in several sectors of the economy.
For one, it is unlikely the stock market would have rebounded so quickly without the influence of low interest rates. While low rates make it more affordable to borrow, they are a disincentive against putting money in the bank. Stocks become more attractive as an investment vehicle when individuals and institutional investors cannot make returns in other sectors. In turn, a rising stock market gives consumers confidence regarding the future of the economy and confidence is a key component of any economic recovery.
Of course, the biggest beneficiary of low rates is the real estate market. Real estate has out-shined other sectors of the economy as the recovery has progressed. Americans realize that sub-3.0% rates on home loans have made owning real estate more affordable and they are buying so quickly that inventory remains historically low. Others are refinancing, freeing up capital. But like the stock market, the real effect of this movement is confidence. Buying a home is all about the future and Americans remain confident in their future. The ability to own a home is one of the great principles of our economy and country -- and today Americans are buying-in big
Just recently, statistics have been released showing the lowest foreclosure rate in history for the first half of this year, according to ATTOM Data Solutions. How can that be true during a deep recession? These low foreclosure rates are actually a function of two different factors. For one, the rate of foreclosures was low before the COVID-induced recession hit. Secondly, the government quickly implemented a moratorium on foreclosures as soon as the economy was shut down.
Eventually, we will have to "pay the piper" for this combination of a deep recession and a foreclosure moratorium which will certainly end. The result should be a flood of foreclosures, not only because we will be catching up from the foreclosures which would have occurred without the recession -- but also because many who lost their jobs during the recession will not be able to make the payments when they resume.
Will this be the housing crisis of 2008 all over again? Most analysts think not -- again because of two reasons. First, a greater percentage of homeowners have equity in their homes, unlike during the Great Recession. Secondly, there is great demand for homes and a shortage of listings today. If you have equity and you can sell your home quickly, you will sell rather than turning it over to the bank. As a matter of fact, this phenomenon may help solve the listing shortage we now have by making more homes available. In conclusion, we will have more foreclosures in the near future. However, a foreclosure crisis is not necessarily a certainty, depending upon how long the economy suffers
The COVID-19 pandemic has given over 50% of Americans the opportunity to work from home due to stay-at-home orders. A new report from Zillow reveals that this could cause a suburban housing boom, as people may no longer need to work full-time in busier, crowded and more expensive metros. Zillow conducted a survey which found that 75% of Americans working from home due to COVID-19 would prefer to continue that at least half the time, if the option was presented when the pandemic subsides. The survey also showed….
Some states have begun opening up. We are starting to see the "new normal" we spoke about, but for now this normalcy does not seem to be very normal. The best description of our moving forward is not turning on a light switch, but turning on a light with a dimmer. And right now, the dimmer is exceptionally low. Each movement will be a gradual rise in the light output of the dimmer. This leaves us with the same question we have had all along--how long will it take?
Is it possible that home buyers are adjusting more quickly to this brave new virus-driven world than was hoped? Will Americans now do the whole home purchase shtick from their living room couch? A recent survey the National Association of Realtors® (NAR) conducted among its members found that one-quarter of them had facilitated a purchase contract where their customers had not physically seen the property.
Liquidating assets may not be the best way to generate cash. Given the current global conditions rapidly impacting our world — the COVID-19 pandemic, political uncertainties, and interest rate cuts to keep the economy on track — it’s no surprise that the financial markets have entered a period of extreme volatility.
