CNBC reports that the housing market has suffered a serious decline due to the COVID-19 crisis, with a 8.5% decline and possibly a 30% to 40% decline later this year.
Sales of existing homes fell a wider-than-expected 8.5% in March compared with February to an annualized pace of 5.27 million units, according to the National Association of Realtors’ seasonally adjusted index.
Sales were just 0.8% higher than in March 2019.
These sales figures are based on closings that represent contracts signed mostly in late January and February, before the coronavirus shut down so much of the economy.
“We saw the stock market correction in late February,” said Lawrence Yun, chief economist at the NAR. “The first half of March held on reasonably well, but it was the second half of March where we saw a measurable decline in sales activity.”
Yun indicated sales could fall as much as 30% to 40% in the coming months. (source)
The housing market is oversupplied and overpriced. It needs badly a market adjustment. However, the current economic realignment will not help bring about a strong currency because as I have stated before, the issue is one of currency and debt.
The US dollar is being overprinted intentionally. It was in a bad position before, and historically on the way to needing to be discarded and revived under a “new dollar”, but the virus has been used as an excuse to expedite this process. The housing market should be expected to continue to suffer as long as the currency declines because if people do not have jobs and for those who have jobs, the value of their money continues to be destroyed, it is not possible or is a foolish decision for most to invest in a home.
Expect to see renting continue to rise as a trend. However, this does not necessarily mean income for renters, since there is talk of orders from the government of demanding that renters provide their tenants with a year of free rent, although no such law has yet to pass.
What is happening right now is a giant, spiraling economic mess that has built up for decades and is being exposed for what is really is. There is going to be a lot more hardship in the years to come, and as the situation worsens, a lot of people will be forced into poverty.
If anything, one should expect to see a lot more empty, half-constructed, or rotting houses as those who cannot live there any more are forced to leave, and with no one to purchase them, leaving them to return to nature.