The last year and a half has been quite the “stir-up” in everyone’s lives. Just take a moment and think how life has changed. None of us thought we’d have gone through some of the toughest times in the history of our country. My how things can change in a moment’s notice.
MoveFlorida Real Estate is Here to Help
Many of you have questions. Questions about how life continues or perhaps the stock market. Unfortunately, we aren’t really qualified to help in those areas, but we CAN help in the world of real estate. So how does the current global environment (financial, political and social) affect the real estate interests of you and those around you?
What’s Your Situation Like?
First, let’s look at a few questions that will help define your current “real estate” situation. Are you currently a homeowner? Do you own multiple homes (I.E. – Vacation home / cabin)? Are you an investor in residential real estate? Are you the owner or have ownership interests in commercial real estate (Offices, Retail, etc…)? Are you a renter, possibly considering the idea of buying real estate within the foreseeable future? Factors regarding each of these situations has changed. Some for the better and some will have to “Wait and see”.
The Effects: Felt for Weeks, Months or Years?
In general, we believe some sectors of real estate have been affected more than others.
Commercial real estate will also see a strong impact as businesses have now learned that they actually can operate with “remote workers”. We’re seeing office demand shrink and some retail businesses struggling to stay open, but not for reasons we would think. The lack of willing work force has created a void in many sectors and businesses once considering expansion are now just hanging by a thread.
Additionally, for those landlords that currently have tenants, being flexible with those tenants may be key to getting the economy back to full throttle. Putting financial stress on a business that cannot pay the bills with the effected revenues, will lead to business closure.
Residential… Temporary or a Looming Disaster?
Residential real estate is still a “wild card” and tough to call. We do know one thing, the longer the public is out of work and seeing reduced wages, the more likely it’ll be that we see a jump in loan defaults. While there is a moratorium on foreclosure proceedings for the timed being (currently scheduled to end July 31st 2021), people that have fallen behind may have a tough time digging out of the hole dug for them. (Read more about Forbearance below)
Those who were around in the late 2000s will likely remember what the subprime bust did to the housing market in Central Florida. With such a large percentage of homes being investment owned, the likelihood of that happening again, though slim, are greater than your average markets around the country.
A flood of foreclosures would be detrimental to the economy as a whole. So until what point can the market hold up and re-start without taking on too much damage? 3 months? 6 months? A year? It’s hard to say but we feel people in this economy have two things working for them, the strength in the housing market prior to (and during) this situation AND the local industries will rebound quickly once the medical risks diminish, economies open back up and travelers return. With the perception of many homeowners having a decent amount of equity in their homes, refinancing can be an option, especially with the lower rates. But will income levels be strong enough?
HOWEVER, with the recently passed Stimulus Packages from congress, homeowners and residential owners with federally-backed mortgages will see leniency in their payment terms and imposed penalties for missing payments. This does not lead to a “debt forgiveness” but rather a deference and a temporary break, on fees, until things get rolling again.
Forbearance???
A large and mostly misunderstood aspect of the economic relief packages for homeowners are being offered via a “Forbearance”.
This is a term that is foreign to almost all who read it, so let’s explain it in simple terms. A forbearance is a temporary relief for borrowers that forbid mortgage companies from punishing homeowners for not making payments. What it doesn’t do is relieve the borrower from the expenses of the loan itself (i.e. – The Interest). Instead, borrowers who have sold during their opted forbearance have learned that their “balance due” has grown substantially and their “net seller proceeds” became far less than it would have been had the mortgage payments been made.
How does this apply to you? Maybe it doesn’t, but if it does…..
We’re glad you asked… homeowners who do not make their payments will be required to “make-up” those missed payments, penalty-free, at the end of the loan. Yes, you read that correctly, a forbearance will require a homeowner to make up their missed payments. All federally-backed loan servicers are being required to realistically work with their borrowers to avoid a massive spike in foreclosures.
Will this create a new foreclosure wave or will lenders be willing to work with borrowers caught up in this situation?
What We Think…
Overall, how will what’s going on, effect the real estate market? COVID-19 in Central Florida appears to be under control with more of the population getting vaccinated.
With interest rates being as affordable as they are and the demand for housing in Central Florida remaining at a near “all-time” high, we do not see the market slowing at any time soon. If you’re currently taking advantage of a forbearance with your bank, let’s chat and see where you stand with regards to home value. Selling while the market demand is strong will ensure the greatest way to get out from under the weight of the current mortgage situation.
If you’re a prospective buyer, we are working hard to find the best deals. People were wanting to sell their homes before the COVID-19 hit and most still want to sell but the buyer pool has increased a bunch so it’s time to take advantage and get top dollar for your home.
Have Questions…? Just Ask!
If you’re a seller and NEED to sell, expect to your situation to level out quickly. If you would rather hold off for a bit, once inventory begins to increase, the market will level out jsut a bit. Not sure if you CAN hold out, then get ahead of the curve!
All in, every individual situation is different due to varying factors. Connect with your MoveFlorida Real Estate professional and let’s find some time to connect (with proper social distance, of course) and examine your individuals situation and develop a plan of attack when things begin to fall back to normal.