Some of the top sources for real estate business news predict a strong 2021 for housing. Economists from Redfin, Zillow, FORBES, Bloomberg, realtor.com, HousingWire and more see mortgage rates remaining low while demand for housing remains high.
But the question on many minds is, how will the new administration affect the industry?
One of the variables that is unknown is the impact of the economic recovery from the pandemic-driven recession, and the outcome for owners in forbearance.
At the recent National Association of REALTORS®’ virtual Real Estate Forecast Summit, NAR President Charlie Oppler spoke with Jim Parrot, a former housing advisor, about what the industry can expect from the incoming Biden administration.
First-Timers & Forbearance
“The Biden administration wants to deal with the racial wealth gap,” Parrott said in the Q&A session, “and they view the racial homeownership gap as being a core part of that problem. If you can bridge the homeownership gap, you can bridge the wealth gap.”
Two of the most anticipated proposals mentioned so far are the reinstitution of a first-time home buyer tax credit, which aims to help low-income households achieve homeownership, and the expansion of mortgage forbearance options.
“If Georgia breaks [for Republicans], the Biden folks will have to rethink their strategy,” Parrott said. The team Biden is putting together, “is a team that knows each other and has wrestled with similar issues in a time of economic stress. It’s a pretty well-positioned team to move quickly and aggressively.”
If the mortgage giants, which have been under government conservatorship since the Great Recession, become privatized, Biden may have a harder time relying on them as avenues to administer federal housing programs that help boost homeownership.
Parrott, who worked with Biden on housing issues in the Obama administration, recalled Biden as a “cut-to-the-chase decision-maker” who wanted to understand who a proposal on the table would help, but also who it would hurt.
Parrot believes that one of Biden’s first moves likely will be to expand mortgage forbearance options for homeowners, and may extend forbearance timelines so they “match up more with the timeline of the recovery. When people come out of forbearance, you want them to come into a healthy economy.”
However, he predicted that foreclosure levels resulting from the economic downturn likely won’t be as severe as those of the Great Recession. Most homeowners aren’t upside down on their properties and can “solve their housing problems by selling rather than going into foreclosure,” Parrott said.