Belfiore: When and how the housing market will return to normalcy and rebound after COVID-19

By Mike Sunnucks | Rose Law Group Reporter

The regional housing market is projected to see significant drops in homes sales for the next two quarters due to the Coronavirus.

But real estate expert Jim Belfiore is optimistic that the housing market will start to recover by the fourth quarter and rebound in 2021 aided by low mortgage interest rates.

Belfiore said a key for housing and other aspects of the economy is for buyers (i.e. consumers) to have confidence to get back out in the marketplace.

“People are going to have to feel more comfortable about going out,” said Belfiore who is president of Belfiore Real Estate Consulting.  He hosted a virtual market update for home builders and other housing industry executives yesterday.

Belfiore said a key action items for home builders, other companies and economic stewards is to build comfort levels for consumers after COVID-19’s shutdown of much of the U.S. economy.

“We need to reassure buyers. The world is going to return to normal. It’s about comforting people,” said Belfiore during the virtual forum.

The next two quarters will show significant drops in new home sales — a key real estate and economic indicator — over the next two quarters, Belfiore projects.

He expects an 80 percent drop in new home sales contracts in the second quarter compared to a year ago and a 50 percent drop in the third quarter.  “The market is sort of going dark on us,” Belfiore said of the pullback on sales from traditional buyers as well as investors and purchasers looking to buy homes as rental properties.

But the real expert expects to the pandemic’s impacts to be temporary.

“I’m projecting a V recovery,” Belfiore said. “We’re kind of hopeful.”

Belfiore then expects to see the economy and housing situation to start to return to more normalcy in the fourth quarter but still with a 20 to 30 percent drop compared to last year.

The first quarter of 2021 is projected to see a 10 percent decline in new home sales compared to this year’s first quarter before a rebound in the spring.

The Phoenix regional housing market had some fundamental strengths before COVID-19 arrived.

Belfiore said historically low mortgage interest rates were spurring the best new homes sales in 15 years before the pandemic and that low lending rates will aid in the recovery.

Belfiore says COVID-19’s duration and impacts need to play out on the greater economy. While he does expect to see an increase in foreclosures, Belfiore points out the pre-Coronavirus foreclosures in the Phoenix metro area were at their lowest levels since before the Great Recession.

He also pointed to low supplies of existing and new homes for sale before the economic shutdown. That helps stabilize prices and market conditions.

“We don’t have a whole lot of supply,” Belfiore said.

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