More than 52 percent of U.S. homeowners currently worry about their ability to continue making mortgage payments, and 47 percent have considered selling their homes because they might be unable to afford mortgage payments in the future, according to a survey of 2,000 households conducted by OnePoll and the National Association of Realtors.
About 81 percent responding said they had suffered unexpected financial distress resulting from the economic shutdown and 56 percent admitted reducing spending in other areas so they could continue to pay their mortgages.
Among the cuts, 71 percent of people spent less on clothes, 66 percent cut down on take-out meals, and 45 percent reduced their outlay for groceries.
Also, 47 percent of people surveyed said they have explored alternative ways to make money, 66 percent started side projects for extra income, and 53 percent have sold valuables to raise cash.
About four million U.S. homeowners, holding 7.54 percent of outstanding mortgages, have entered formal programs to delay or reduce their payments.
In the aftermath of the economic shutdown, the number of mortgages in arrears will surpass that reached during the Great Recession, according to an Oxford Economics analysis. The firm has forecast a coming “tidal wave” of mortgage defaults.
Home Sales Crater
U.S. home sales dropped in May at an annualized rate of 26.6 percent, the biggest drop since 1982 and the slowest sales pace since October 2010 during the Great Recession.
Single-family home sales dropped 9.4 percent from April’s volume; condominiums were off 12.8 percent month-to-month.
From April to May, sales fell 8 percent in the South, 10 percent in the Midwest, 11 percent in the West, and 13 percent in the Northeast.
Sales were hobbled not only by the millions of jobs the economy lost but also from uncertainty about the future on the part of both buyers and potential sellers.
The number of houses for sale across the country numbered 18.8 percent fewer compared to May 2019.
Sales were brisk among lower-priced homes but slowed the farther up the price scale the properties were.
The median price of homes sold in May was $284,600, up 2.3 percent from May 2019 but the smallest annual rise since February 2012.
Manhattan Rentals Falling
Apartment rents in Manhattan are falling in parallel those in the San Francisco Bay area.
As companies allow white-collar employees to work from home, workers are abandoning pricey urban apartments for cheaper digs farther from downtown. Landlords, in turn, are cutting rents as they scramble to fill their empty flats.
Manhattan’s apartment vacancies stand at a 14-year high and new renters are negotiating monthly payments more than 8 percent below the asking price, according to RealPage, which makes property management software.
At the same time, sales of suburban homes close to the New York City metro area are brisk.
Other high-growth economic hubs, including Atlanta, Charlotte, Nashville, and Orlando, are seeing apartment vacancies above 5 percent.
In 11 of 27 other high-growth urban centers, rents have declined in the last month. In Seattle, Austin, and other areas where apartments are hard to come by, the pace of rent growth has eased.
TREND FORECAST: The Trends Journal was the first source to warn of declining real estate prices and rentals when the U.S. lockdowns began.
Major cities, such as Manhattan, are a shadow of themselves, and with more people working at home and fear of human contact still engrained in the minds of the masses, we forecast dramatic falls in real estate prices.
The big Gen Z and Millennial trend, “FOMO” (Fear of Missing Out) has now been replaced by “FOHC” (Fear of Human Contact).
Moreover, with tourism all but dead, less foreigners investing in U.S. real estate… more people working at home and others leaving densely populated big cities for small ones (a trend we had forecast four months ago), big cities will shrink in population and real estate prices will sharply decline.
Crime will also rise. As Gerald Celente has long said, “When people lose everything and have nothing left to lose, they lose it.”
