The housing market is essentially in free fall at the moment and that is not likely to reverse in the immediate future. Even those who assert that a recovery might develop by the third or fourth quarter of this year are convinced that the housing market will lag that recovery and perhaps for months. There are multiple issues here. The most important of these is the attitude of the potential homebuyer. The desire to seek a new home has diminished considerably due to the lockdown restrictions and there are millions of people who are no longer in a financial position to consider buying. The construction sector itself has been affected by a continued shortage of qualified workers. The bankers are still interested in providing mortgages, but there has been a significant drop in applications from both the upper and lower ends of the market. Those at the upper end have been hammered by the market collapse. That constrains their action. The only promising development is it appears that the millennial buyer is more interested in single-family homes than in the past. The people locked down in their apartments are now eager to get more space. When they start to look again, they might still move towards rejecting that multi-family option.
Chris Kuehl, Ph.D., NACM Economist