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Real Estate Matters: Real estate roller coaster rides up and down from 2020 into 2021

Ilyce Glink and Samuel J. Tamkin, Tribune Content Agency on

It’s safe to say that 2020 will go down in history like a year no other. Even, or perhaps especially, in real estate.

COVID-19 lockdowns hit mid-March, and by the beginning of April, we heard whispers about a dramatic change in attitude from home buyers. Agents and brokers across the country reported that buyers were fleeing big city centers, looking to escape crowded living spaces, shared elevators, shuttered restaurants and the cultural institutions they had enjoyed and supported for decades.

Where were they moving? Anywhere they could get more space: suburbs and even rural America (but only if there was great Wi-Fi). The more green space the better. Those who could work from home, and were now helping their children go to school at home, wanted more space for themselves and their families.

City condos went on the market. Suburban houses started selling like hotcakes. Condos took longer to sell, and list prices started dropping (a little in some areas, more in others) while suburban home prices soared. (Rent prices in markets like San Francisco and New York dropped as well, with landlords offering dramatic monthly rent reductions with free months of rent, a trend that continues.)

But COVID-19 hasn’t caused a real estate housing crisis the way the Great Recession caused millions of suddenly unemployed homeowners to burn through their cash as they fought, and ultimately fell into, foreclosure.

The CARES Act was passed. A remarkable piece of legislation, it required lenders to allow homeowners with federally backed mortgages (by Fannie Mae, Freddie Mac, FHA, VA and USDA) to opt into no-fault forbearance. Just for asking, you could stop making your mortgage payment without leaving a seriously negative, long-lasting imprint on your credit history (or tanking your credit score).


Forbearance would last as long as 12 months, and then you’d have three ways to come out of it: The missing payments would be tacked onto the end of your mortgage, you’d just pay the missing amount in a lump sum (or a catch-up plan would be enacted) or the loan would be modified to an amount you could afford to pay. It was eminently reasonable, and without precedence.

(At the same time, the CARES Act put almost all federal student loans into forbearance, which took pressure off those facing monthly mortgage and student loan payments. As a result, a significant portion of those in mortgage forbearance continued making their monthly payments anyway.)

According to Freddie Mac, at the height of the pandemic, roughly 8% of homeowners opted into mortgage forbearance. Today, 5.46% of homeowners are still in its protective shell according to the Mortgage Bankers Association. Average credit scores reached a new high in 2020, and mortgage interest rates hit new loans more than a dozen times. (How low? The mortgage interest rate on an adjustable loan we have was just reduced to 2.785% for 2021.)

Those Americans who held onto their jobs, or got them back fairly quickly, deleveraged their debt. When solid credit scores and the lowest interest rates in history met the need to escape for literally greener pastures, demand for housing soared, and prices skyrocketed.


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