In the wake of the COVID-19 pandemic outbreak all around the world, it is no gainsaying that so many industries and markets have suffered and were still suffering from it.
The Industries Affected by The Covid-19 Pandemic Outbreak
For instance, it’s plain for everyone to see that the Aviation industry suffered a lot of setbacks during this Covid-19 pandemic outbreak as both local and international flights were restricted all over the world. Another industry that suffered badly during these times is the entertainment industry like Las Vegas which is the hub of entertainment and tourism. No tourists can travel to have fun in Las Vegas, and even when they come in, a lot of the fun spots have remained locked.
The sports industry is no exception to the low patronage, as the Covid-19 pandemic safety guidelines have barred human touch, hence bringing clamp-on physical sports. This has made the industry lose revenues, which were normally generated from ticket sales, match viewings, TV rights, endorsements, and jersey sales.
Another vital industry that has suffered from low sales as a result of the Covid-19 pandemic is the housing industry. Let’s take a walk through how 2020 has been a rough year for the housing market.
The Housing Market in the Face of Covid-19: An Overview
In the past few years before the Covid-19 pandemic, the housing market has experienced a significant amount of growth and development as there is a steady and constant demand for houses. Hey! Everyone needs somewhere to stay, and there is an equal supply of housing available too! Not to forget to mention that mortgage payment went as low as 2.6% in the year 2019, thereby making it possible for prospective home buyers to have access to homes easily.
Now, coming to the year 2020, which we have all tagged as the year “we don’t want to experience again”, the housing market has experienced a downturn as there is a seeming crash in the housing industry. Not to get things twisted, the crash in the housing market didn’t happen because there is not enough supply of housings to a teeming number of buyers or renters, or because there is a drop in the prices of housings.
The crash is happening because there is a low turnout of buyers for the teeming numbers of housings available. This means that there is not enough demand for the supply of houses available!
Reasons for the Low Demand for Houses
There are a quite number of reasons why the housing market is not getting enough patronage in this year 2020, and a few of these reasons will be discussed below:
1. The inability to conduct a physical tour of the housings for sale. Due to the lockdown, prospective home buyers find it difficult to do a thorough search of the homes for rent or sale; hence they are left with virtual tours which does not do much when it comes to delivering all there is to know about the house.
As a result of this inadequacy, a lot of prospective home buyers or renters lose interest in buying or renting homes.
2. The other reason why there is a crash in the housing market is the fact that a lot of persons are out of jobs.
It is no longer news that about 26 million people are out of jobs presently. Hence, these people are faced with three problems; the inability to pay their mortgage, the inability to pay rent, and the inability to buy/rent new spaces.
3. Another reason for the clash in the housing market can be accrued to the inability of prospective home buyers to secure mortgage loans.
Currently, in the United States of America, financial institutions such as JPMorgan Chase, Goldman Sachs, Barclays Investment Bank, and Citigroup have raised a bar concerning mortgage loans.
If you want to get a mortgage loan in an investment firm such as JPMorgan Chase and Co., there are other criteria to be met such as:
• You must have a credit score of not less than 700.
• You must undergo an income verification three days before the application for a mortgage loan.
• You must make a down payment of about 20 percent of the value of the home.
In all, these criteria are indirectly targeted at making the housing market plunge into an abyss because, with these new mortgage loan laws, the number of people who can afford to buy homes has reduced drastically.
In a case where there are fewer buyers, homeowners now have no choice but to sell their homes, most especially good homes, for less befitting prices, which is not a good look for the housing industry at all.
Based on the foregoing, it is obvious that the housing market will hit the dust if something positive doesn’t come along pretty soon. It is either the government provides bailout funds for the market, thereby creating a soft landing for homebuyers to be financially sufficient to obtain mortgage loans.
On the other hand, investment and financial institutions can also help to reduce the criteria attached to mortgage loans.
If any of these happen, it will surely boost housing sales, which will, directly and indirectly, boost the housing market in the long run.
