By Logan Mohtashami | HousingWire
In 2021, a lingering symptom of the economic sickness we suffered in 2020 is forbearance. Not the forbearance plans themselves, which allowed mortgage holders to delay their payments for many months, but the fact that 2.72 million homes remain in forbearance and can therefore be considered at risk. Forbearance will have to end at some point, and when it does, couldn’t all these homes flood the housing market at once, driving prices down and scaring would-be homeowners away from purchasing?
We know the current status of the housing market in America is vigorous, if not hot. The MBA purchase application data is growing at a trend of 12% year over year. This growth is 1% higher than the peak of what I forecasted for 2021, up until March 18.
So while the housing market bubble bears predicted a crash due to the COVID crisis, the exact opposite is happening. Home price growth is accelerating above my comfort zone for nominal home price growth, which is 4.6% or lower. As I have written many times, the housing market’s current strength is not because of COVID-19, but despite it. Demographics plus low mortgage rates serve as the one-two punch that knocked out COVID-19.