RT Journal Article
SR Electronic
T1 The Pandemic’s Effect on the Housing Market and Mortgage Delinquency
JF The Journal of Structured Finance
FD Institutional Investor Journals
SP 41
OP 51
DO 10.3905/jsf.2020.1.112
VO 26
IS 3
A1 Frank E. Nothaft
YR 2020
UL https://pm-research.com/content/26/3/41.abstract
AB Weekly data show how housing activity contracted as the pandemic expanded. Both the home purchase and home rental markets experienced a 40% to 50% decline by mid-April relative to year-ago activity, but subsequently rebounded. Record low mortgage rates spurred home buying, driven by first-time home buyers, and a refinance boom. Home prices rose through summer 2020 as the for-sale inventory remained in short supply, but price growth is forecast to slow and fall in several states by 2021. Projections show that elevated unemployment coupled with declining home prices would cause serious delinquency and distressed sales to rise. Compared with the pre-pandemic period, the Baseline projection shows a fourfold increase in serious delinquency and distressed sales within two years, with more than 2 million home mortgages in serious delinquency by year-end 2021.TOPICS: Financial crises and financial market history, MBS and residential mortgage loans, real estateKey Findings• Both the home purchase and home rental markets experienced a 40% to 50% decline by mid-April relative to year-ago activity, but subsequently rebounded.• Projections show that elevated unemployment coupled with declining home prices would cause serious delinquency and distressed sales to rise. • Compared with the pre-pandemic period, the Baseline projection shows a fourfold increase in serious delinquency and mortgage loss events within two years, with more than 2 million home mortgages in serious delinquency by year-end 2021.