- Mortgage applications in states hit hard by coronavirus fell significantly.
- Buyers around the country will dry up despite low interest rates as recession sets in.
- Job losses will force many into selling despite reduced house prices in a few months time.
Coronavirus has already tanked financial markets, but now the panic is moving into the US housing market .
Data out this week show that mortgage applications have fallen dramatically in states that have been hit hard by coronavirus, a trend that’s only going to get worse as the number of new cases in America continues to rise.
The mortgage data Paint a grim picture for the future as it suggest house prices are about to come crashing down.
The Housing Bubble that Started it All
Before coronavirus was splashed across the headlines, house prices were near all-time highs. That’s because interest rates were near all-time lows amid a booming economy and a bullet-proof bull market. But the ultra-low interest rates needlessly inflated house prices to unattainable levels.
Not only were the properties being sold overvalued , but people couldn’t afford them. From (to) average house prices in the US shot up %. By contrast, average wages were up less than % over the same time period. But cheap mortgages meant people could still ‘afford’ to become buyers .
but new data show the housing market is about to see a steep decline in home prices that will leave thousands of people paying for equity that’s becoming worthless.
Mortgage applications in New York, the epicenter of the US coronavirus crisis , have fallen significantly.
Data from the Mortgage Bankers Association (MBA) show the number of mortgage applications in New York saw a weekly decline of 20% last week — a 200% drop from where they were at this time last year. Similar trends were seen in both California and Washington, where coronavirus outbreaks have been concentrated.