05 May Housing Market Tightens
The stock market is seeking another run higher this morning as investors look forward to businesses reopening and brining the US economy back to life. The sad reality is that many of the major brands are currently in deep financial trouble, with some already heading towards bankruptcy. This is terrible news, however, isn’t enough to deter investors. Add to the mix the fact that further tariffs could be in store as a retaliatory measure towards China, and then try to explain the current stock market rally. Could this be a “buy the rumor sell the news” type of scenario? No other explanation makes sense to me.
With over 3.8 million US homeowners currently in payment forbearance, the inventory of homes for sale continues to tighten. When someone has a 6-12 month break from making a payment, their odds of selling their home during this time is greatly reduced. Once this group of people reach the end of their payment forbearance term, we can expect to see many of them decide or be forced to sell their homes. At that point, we will see inventory levels rise and hopefully get us on the path towards a more healthy balance of buyers vs. sellers.
With markets remaining stable, there is more risk of upward pressure on mortgage interests rates than hope for a downturn in the near term. We will maintain a locking bias.