The housing market will crash by January 2021. My prediction could easily be earlier or later due to Congress, President Trump, COVID-19, and other random events. I will continue to update my thoughts.
Rent growth will be zero or negative due to an increase in vacancy for housing assets. Homes, Multifamily, Mobile Home Parks, Affordable Housing, must have a correction. WE ARE IN A DEFLATIONARY MARKET DUE TO A DEMAND SHOCK.
The housing market has not crashed due to money creation. Cares Act is helping renters with an extra $600 unemployment benefits and eviction prohibition, which already expired in July. Trump’s recent execution order may allow an extra $400 unemployment benefits and eviction prohibition till December.
Not all markets will crash the same. Some markets will crash harder due to a much higher unemployment level since relying on an industry that was hit hard by the pandemic, like Hotels, Tourism, and Retail. Some markets will not crash but have zero or slow price growth. Many markets will experience negative price growth. Class B- and under affordable housing assets will decrease in value due to current income loss involve tenets in low class. Class A and B+ will decrease in value since some may downsize to cheaper housing. Overall, Affordable housing assets will only correct, not crash like other commercial real estate assets. But in some markets, affordable housing assets may crash due to higher than average unemployment rates.
249,000,000, 100% Adult population
126,000,000, 51% Adult population loss in income
87,000,000, 40% Adult population expect a loss in income within another 4 weeks
44,000,000, 18% Adult population who are not paying rent
30,000,000, 12% Adult population sometimes eat in the last 7 days or not at all
89,000,000, 36% Adult population who delayed getting medical care
Source: U.S. Census Bureau Household Pulse Survey (Real-time data)