Buying a property in Chicago is still considered as a good real estate investment. We’ll be discussing the latest Chicago housing market trends to find out how they can affect the investors and homebuyers in 2020. Chicago metropolitan area or Chicagoland, is an area that includes the city of Chicago and its suburbs.

Although the most expensive home in the Chicago housing market in 2020 is a $45 million single family home, located in the North Side neighborhood, there are many properties available around the median price of $247,000.

In 2018, the Chicago real estate appreciation rate was running at about half the national rate; at 3 percent range when the nation was at 6 percent. After cooling off, Chicago became the weakest housing market of 2019. The home prices grew by mere 1.5 percent, lagging behind the nation. The market is now expected to heat up in the coming months.

Chicago is still a strong renter’s market. Over 50% of the populations rents in this city. So if you buy a Chicago real estate investment to use as a rental property, you could benefit in this market. Although the recent population loss has been a concern for real estate investors, Chicago is still the most populous city in the Midwestern United States. About three million people live in Chicago and another ten million in the surrounding metro area. Chicago MSA is the third largest metropolitan area in the U.S.

It has a large population, diverse economy, and a stable market. It is home to 32 Fortune 500 companies, with a very high private sector employment. Chicago’s 58 million domestic and international visitors in 2018 made it the second most visited city in the nation, as compared with New York City’s 65 million visitors in 2018.

How is the robust housing market in Chicago shaping up in 2020 for real estate investors as well as home buyers? Well, the home prices are expected to flatten nationwide, increasing by just 0.8%, and buyers will continue to move to affordability, benefiting mid-sized markets. However, the real estate appreciation rate in Chicago in the latest quarter was around 1.29% which equates to an annual appreciation forecast of roughly between 5% to 6%.

For sellers in Chicago, a nice profit could be on the horizon. Even small changes in the appreciation rate can change the long-term value of buying considerably. Let’s learn more about the factors that make Chicago a nice place to invest in real estate.

What Makes Chicago Real Estate Market Attractive For Investment?

Chicago was ranked first in the 2018 Time Out City Life Index (Time Out Group).On the UBS list of the world’s richest cities.Often rated as having the most balanced economy in the United States.Ranked seventh in the entire world in the 2017 Global Cities Index.Home to 12 Fortune Global 500 companies and 17 Financial Times 500 companies.Third-largest gross metropolitan product in the United States.Strong Rental Market – Over 50% of the population rents.Fully renovated single family homes with great ROI.Solid blue-collar areas with high rents.High private sector employment.Major transportation hub in the United States.It has largest number of federal highways & railroads in the nation.Strong economic and job growth.Chicago tourism recorded 55 million visitors in 2017.The tourism and hospitality industries have added thousands of jobs, generating billions of dollars in direct spending by visitors.International hub for finance, culture, commerce, industry, education, technology, telecommunications, and transportation.2% increase in Chicago’s government employment between November 2018 to November 2019 (Bls.gov).

These are just some of the highlights that make Chicago a great place to live and invest in real estate. The list can go on and on. Chicago is a also a major world financial center, having the second-largest central business district in the United States. Let’s continue to explore the city’s housing market to understand what it will look like in 2020.

Real estate prices are deeply cyclical because its demand side is impacted by economic cycles, and also because demand has historically outweighed supply. Much of it is dependent on factors you can’t control. Therefore, there are many variables that can potentially impact the value of real estate in Chicago in 2020 (or any other market) and some of these variables are impossible to predict in advance.

Chicago Real Estate Market Forecast 2020 – 2021

The Chicago housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the United States. It is also one of the hottest real estate markets for investing in rental properties.

What are the Chicago real estate market predictions for 2020? Let us look at the price trends recorded by Zillow over the past few years. Since 2015, the median home prices in Chicago have appreciated by roughly 20.5% from $205,000 to $246,933, according to Zillow’s data.

As you can see in the graph, the Chicago housing market was weak in 2019, essentially flat. In fact, November was the third straight month that home values grew by less than 1 percent, according to the S&P CoreLogic Case-Shiller Indices. In the November report, Chicago’s home price growth was the weakest among the 20 major U.S. cities that the index tracks.

In the last twelve months, the Chicago real estate has appreciated by 0.3%. Chicago is expected to see home prices gains in 2020, albeit at a softer pace compared to the nation’s largest markets. The latest Chicago real estate market forecast is that the home prices will rise by 3.2% – in the next twelve months.

The latest real estate data from Zillow shows that the current median home value in Chicago is $246,933. This indicates that home prices in Chicago are well above the national average for all cities and towns in the United States.

Here is a snapshot that shows the median home values in the some of the popular neighborhoods in or around Chicago.

Chicago is currently a warm seller’s real estate market. This indicates that there are more real estate buyers in the Chicago than there are sellers. When demand is higher than the supply, home prices increase, which benefits sellers. Zillow reports that 14.5% of the listings in Chicago had a price cut in Jan 2020.

Here is the Chicago real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 3.2% till Feb 2021.

Chicago Housing Market Forecast 2021

Here is a short and crisp Chicago housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Chicago is 84% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Chicago is 84% during this period. If this price forecast is correct, the Chicago home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.

Chicago Real Estate Market Trends – Prices, Inventory & Sales

Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. We shall now discuss some of the most recent housing trends in the Chicago area from multiple sources and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region.

Chicago is the 6th most walkable city in the nation. Chicago metro area has a population of approximately 8,865,000, a 0.03% increase from 2019. It is the most populous city in the U.S. state of Illinois, and the third-most-populous city in the United States. 

On average, homes in Chicago, IL sell after 86 days on the market. The trend for median days on market in Chicago, IL is flat since last month, and slightly up since last year.Chicago’s home resale inventories is 6,505, which is a decrease of 15% since last year, according to Movoto.com. The median list price per square foot in Chicago is $258. In March 2020 it was $259. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in April.In terms of months of supply, the Chicago market can tip to favor buyers if the supply increases to more than six months of inventory. However, looking at the current trends, we don’t see things moving in that direction. For upcoming updates you can check visit their website. It is expected that there will be some improvement on the inventory crisis. Certain areas in the Chicago housing market would see more properties for sale on the market than other locations.

According to Neighborhoodscout.com, a real estate data provider, one and two bedroom large apartment complexes are the most common housing units in Chicago. Other types of housing that are prevalent in Chicago include single-family detached homes, duplexes, row houses and homes converted to apartments.

At the national level, the single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.

Chicago has a mixture of owner-occupied and renter-occupied housing units. Trulia has currently 9,413 resale and new homes for sale in Chicago, IL including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median sales price is $280,000 and homes are selling for about $235/sqft.

Currently, there are 2617 homes for sale in Chicago on Zillow, an online real estate database company. Additionally, there are 292 homes for rent. Under potential listings, there are about 257 Foreclosed and 3000 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).

• The median list price per square foot in Chicago is $243, which is higher than the Chicago-Naperville-Elgin Metro average of $165.
• The median price of current listings is $329,000.
• The median price of homes that are sold out is $303,400.
• The median rent price in Chicago is $1,761, which is higher than the Chicago-Naperville-Elgin Metro median of $1,685.

There are currently 13,932 homes for sale and 14,751 homes for rent in Chicago, IL on Realtor.com, a real estate listings website. According to their statistics, in February 2020 the Chicago housing market was a buyer’s market, which means there were roughly more active homes for sale than there were buyers.

However, as per other real estate data companies, Chicago would fully transition into a warm seller’s market, having a positive price appreciation forecast for the next twelve months.

Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in Chicago have managed to hold good leverage in these negotiations in the past month. On an average, they could sell homes for 97.74% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.

• In February 2020, the median list price of homes in Chicago was $339,900, trending up 4.6% year-over-year.
• The median listing price per square foot was $233.
• The median sale price was $289,900.
• The median rent price was $1,950.

The asking price of single family homes in Chicago can start from $10,000 and can go up to $45M for a luxury property located in North Side neighborhood . There are currently 712 newly listed homes and 197 new construction houses available for sale in the Chicago housing market.

Lincoln Park has a median listing price of $675,000, making it the most expensive neighborhood in Chicago. Auburn Gresham is the most affordable neighborhood, with a median listing price of $175,000.

Homes For Sale in Chicago	13932
Homes For Rent in Chicago	14751
Median Listing Price	$339,900
Median Sale Price	$289,900
Sale to Asking Price Ratio	97.74%
Median Rent	$1,950
New Listings	712
New Construction Houses	197
Median List Price/Sq Ft	$233
Home Price Range	$10k to $45M
Most Expensive Neighborhood	Lincoln Park
Most Affordable Neighborhood	Auburn Gresham

Chicago, IL Foreclosures And Bank Owned Homes Statistics 2020

As per the Chicago foreclosure data by Zillow, the percent of delinquent mortgages in Chicago is 1.3%, which is higher than the national value of 1.1%. The percent of Chicago homeowners underwater on their mortgage is 21.4%, which is higher than Chicago-Naperville-Elgin Metro at 13.5%.

There are currently 4,445 properties in Chicago, IL that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 5,143. In February 2020, the number of properties that received a foreclosure filing in Chicago, IL was 6% lower than the previous month and 6% lower than the same time last year.

Potential Foreclosures in Chicago	4445 (RealtyTrac)
Homes for Sale in Chicago	5143
Recently Sold	17917
Median List Price	$285,000 (2% rise vs Jan 2019)

In Chicago, the zip code with the highest foreclosure rate is 60643, where 1 in every 403 housing units is foreclosed. 60644 zip code has the lowest foreclosure rate, where 1 in every 562 housing units becomes delinquent.

Is Chicago a Good Place To Invest in Real Estate?

Now that you know where Chicago is, you probably want to know why we’re recommending it to real estate investors. Is Chicago a Good Place Real Estate Investment? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a rental property in Chicago is good investment?

You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Chicago housing market 2020 forecast for answers on why to put resources into this market.

Purchasing an investment property in Chicago real estate is a little different from shopping for your car or primary residence. While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the Chicago real estate market and expect to make a good profit on rents.

Perhaps you are looking for a slightly different hold-over, a turnkey investment property in Chicago that you might move into or sell at retirement in the future! Either way, knowing your profit potential and purpose is the first thing to consider.

Let’s take a look at the number of positive things going on in the Chicago real estate market which can help investors who are keen to buy an investment property in this city.

1. Strong Rental Market

What makes Chicago such a hot market for rental real estate? Over 50% of the population rents. The large population of renters means that rental income for properties is far better than you’d see if you invested elsewhere in the country. Schaumberg reported slowing sales simply due to tight supply according due to data from the Chicago Association of Realtors; this drives many people forming new households or moving into the area to rent at whatever the market will bear.

2. Luxury Rentals Are a Profitable Niche in Chicago

Many people know that there are solid blue-collar areas with high rents, but it isn’t just the working class that rents townhomes and condos. According to Crain’s, the number of upper income households in Cook County that rent has nearly doubled over the past ten years.

The Institute for Housing Studies at DePaul University found that the number of rental households among those earning at least $132,000 a year nearly doubled, while those earning $80,000 to $132,000 saw the number of renting households increase by just over 50%. Chicago has a booming supply of high end rentals, especially luxury apartments in downtown.

3. Chicago Real Estate Prices Are Reasonable

Because households at all income levels choose to rent instead of buy, they are reducing demand for houses for sale, slowing the rise in home prices. This also explains why housing prices haven’t skyrocketed despite limited supply. Chicago’s inventory of homes for sale is very tight. Both attached and detached single family home inventory has been declining since 2012.

At the end of 2017, potential buyers in Chicago had about five thousand fewer properties on the market to select from than if they’d been shopping at the end of 2016. This contributed to homes closing five days faster than the year before. If you start shopping for rental real estate, you could find something and rent it out.

4. Home Prices Are Appreciating

Chicago’s real estate market has been one of the slowest to recover since the housing bubble burst at the start of the Great Recession. Home prices were 19% below their pre-crash levels in 2017, and they aren’t expected to hit peak values until 2020.

This means that the Chicago real estate market is likely going to continue its slow, upward market trend. Trulia expects prices to grow about 2.5% in 2018. Trends in Chicago show a 1% year-over-year rise in median sales price and a 3% rise in median rent per month.

5. Rehabbed Homes Are Readily Available

Chicago is seeing a surge in fully renovated single family homes. The Chicago Association of Realtors’ data found that most of the strong suburbs are on the south side of Chicago, and this is where many homes are being rehabbed and sold. Calumet Heights is in this category; a quarter of properties sold were either rehabbed or candidates for rehabilitation. These properties are ideal for investors who want to buy a property to rent out.

6. Job Growth Keeps People Coming

Chicago is not only home to a number of corporate headquarters; there has been a recent trend of companies moving their headquarters to Chicago as well. The steady increase in jobs has contributed to a slow but steady increase in rents. Many businesses are attracted by Chicago’s labor pool, the largest in the nation. As these businesses move into the area and attract relocating professionals, many are forced to rent because they can’t find houses fast enough in the areas they want to live or simply choose to rent upon relocation in one of the luxury apartments downtown.

The Chicago metropolitan area is made up of four metropolitan divisions—separately identifiable employment centers within the larger metropolitan area. In the greater Chicago metropolitan area, education and health services had the largest employment gain from November 2018 to November 2019, adding 15,600 jobs. The Chicago area’s 2.1-percent rate of job growth in education and health services was lower than the nationwide advance of 2.9 percent.

Chicago’s government supersector added 10,800 jobs from November 2018 to November 2019. Local job growth was concentrated in educational services, which added 10,600 jobs. The 2.0-percent increase in Chicago’s government employment compared to a gain of 0.7 percent nationally.

7. Churn Keeps People Renting

Chicago’s unemployment rate has gone up while dropping in other cities as jobs shift from Chicago to the suburbs. This economic uncertainty keeps many who can afford to buy a home renting. It also keeps the rental market itself strong, since many want to remain free to follow their jobs as required.

8. Trump’s Tax Plan Makes Many Reluctant to Buy – Unless It Is a Rental

Uncertainty about the deductibility of hefty property tax bills is making many reluctant to buy a home, though this is less of an issue for a real estate investor who will rent out the property. Chicago and its suburbs have some of the highest property taxes in the nations. Around 12% of Chicago area homes have a tax bill of more than $10,000 a year. Yet that’s better than some of the most expensive real estate markets in the country.

For example, in New York, more than 20% of homes have a property tax bill that high. In Orange County, California, more than half would. This means that limits or the loss of property tax deductions won’t hurt Chicago as badly as it would California or New York, and if it does have an impact, it will mostly be at the higher end of the Chicago real estate market.

9. You Can Find Hot Single Family Markets with Rapid Appreciation

Home prices in the Chicago area are low compared to regional income. Yet economic uncertainty and shifts in the employment market are leaving many who want to live in a single family home unable to afford to buy one. This is causing many to rent single family homes instead.

Crain’s April real estate report found that the hottest markets for detached single family homes were in Calumet Heights, Gage Park and West Ridge. However, home prices are low compared to rents almost everywhere in the Chicago metropolitan area.

10. There Are Opportunities in Chicago Multi-Family Housing, Too

The workforce in Chicago is shifting from high paying but slow-to-no growth manufacturing jobs to lower paying and less stable retail, business services and healthcare jobs. This is causing many who would have been able to afford a middle class home to rent apartments instead. Crain’s April real estate report stated that the hottest Chicago markets for condos and townhomes were Grand Boulevard, Kenwood and Lincoln Square.

Investing in Chicago Real Estate: Advice For New Buyers

Maybe, you have done a bit of real estate investing in Chicago, IL but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Chicago real estate investment?

In Chicago, arts and culture abound at top institutions like The Art Institute. Although the winters can test anyone’s resolve, Chicago summers are among the best in the world, with things to do every weekend, outdoor festivals, and Lake Michigan at your doorstep.

Chicago has an incredibly deep pool of potential renters at all levels of the market. A number of factors guarantee that they’re not going to turn into new home buyers any time soon. Chicago real estate market is a prime destination for investors who would like to buy where the ROI is going to be high and likely to improve over time. It won’t be long before Chicago makes you feel right at home.

A good cash flow from Chicago rental property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a best investment property in Chicago in a growing neighborhood would be a key to your success.

If you invest wisely in Chicago real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. The less expensive the Chicago investment property is, the lower your ongoing expenses will be.

When looking for real estate investment opportunitiesin Chicago or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental.

That would be the ideal equation example. Even with rent increases, buying a $500,000 investment property in Chicago is not going to get you $5000 per month on rent. When looking for the best real estate investments in Chicago, you should focus on neighborhoods with relatively high population density and employment growth.

Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

Some of the popular neighborhoods in Chicago, Illinois are Near North Side, Lakeview, West Town, Andersonville, South Loop, Bronzeville, Norridge, Logan Square, Old Town, Wicker Park, Bridgeport, Irving Park, Norwood Park, Bucktown, West Loop and Hyde Park.

Chicago’s North Side is the city’s most densely populated residential section. In the $200,000 price, you can purchase properties with one or two bedrooms and one or two baths. Chicago’s West Side is home to the University of Illinois at Chicago. With a $200,000 budget, you can buy condos that typically offer one to two bedrooms and one or two baths

You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Chicago.

Chicago Housing Market 2020: Is It Really Good For Investment?

Our research team releases regular monthly housing trends reports which break down inventory metrics like the number of active listings and the pace of the market. In light of the developing COVID-19 situation affecting the industry, we want to give readers more timely weekly updates. You can look forward to a Weekly Housing Trends View near the end of each week. Here’s what the housing market looked like last week.

Weekly Housing Trends View

• Time on market: Slower to react, time on market now clearly shows the impact of fewer new home listings coming to market and properties sitting for-sale longer, as fewer buyers submit offers nationwide and in half of large metros. In the first two weeks in March (our pre-COVID-19 base), days on market were 4 days faster than last year on average. Last week, median days on market were one day greater than the year ago level, and we expected time on market to rise. This week’s data showed that time on market was 6 days or 10 percent greater than last year, the biggest increase in time on market since 2013. This is the first clear sign of for-sale homes sitting on the market longer, waiting for buyers.  It’s visible in local data as well as the national figures, with 54 of the largest 99 metros showing similar double-digit percent increases in time on market from one year ago. Importantly, analysis of metro data from last week shows a strong link between the prevalence of COVID-19 in a market and increasing time on market.  In the 10 worst-hit metros, time on market was up 15 percent, compared to just a 2 percent increase among the 10 least-affected metro areas, analysis detailed here. 
• New listings: Past the peak? Declines in newly listed for-sale homes persist nationwide and in nearly all (97 of 99) large metros, but the size of declines shrank compared to last week. Persistent declines still show that many sellers are reevaluating or postponing sales rather than wading into the current uncertain housing market.
  
  In the first two weeks in March (our pre-COVID-19 base), new listings were increasing 5 percent year-over-year on average. In the most recent three weeks ending April 4, and April 11, and April 18, the volume of newly listed properties decreased by 31 percent, 47 percent and 42 percent year-over-year, respectively. While this improvement is small and only visible in one week of data, far below the threshold we’d need to declare that we’re past the worst in housing, we see a similar trend in nearly three-quarters of the top 100 metros (73 of 99) including several hard-hit areas like Seattle, Boston, and New Orleans. The largest drops in new listings persist in Detroit, New York, and Philadelphia.
  
  Additionally, analysis of metro data from last week shows a strong link between the prevalence of COVID-19 in a market and fewer new listings. In other words, areas particularly hard-hit by COVID-19 were showing the strongest seller reactions, as detailed here. 
• Asking prices: Sellers hold asking prices steady and the mix of homes for-sale shifts toward more lower-priced homes.
  
  In the first two weeks of March (our pre-COVID-19 base), median listing prices were increasing 4.4% year-over-year on average. In the most recent three weeks ending April 4, and April 11, and April 18, the median U.S. listing price posted an increase of just 1.6, 0.8 and 0.3% year-over-year, respectively, the latter marking the slowest pace of growth since 2013. Viewed another way, asking prices typically increase in the spring. Last year, the median list price rose more than 4 percent from early March to early April whereas this year the median list price has remained flat in that same window.
  
  Sellers that are choosing to sell now seem to recognize the market challenges and may be pricing homes less aggressively upon listing than they were pre-COVID which is why we are seeing steady asking prices. Majorities of buyers and sellers do not anticipate large-scale price declines. A survey from the National Association of Realtors conducted April 19-20 shows that 53 percent of buyer agent clients expect home prices to increase or decline only mildly (by less than 5 percent). Similarly, 89 percent of agents with seller clients had either not reduced their asking price or had done so by less than 5 percent. These results support trends we’re seeing in the listing data. So far we’re seeing a smaller share of asking price reductions compared to this time last year in the U.S. and three-quarters (74 of 99) of top metro areas.
  
  Additionally, high-cost areas such as the northeast have seen some strong seller reactions–de-listings and fewer new listings–which has shifted the distribution of homes for sale nationwide toward a lower price point. 
• Total Active Listings: Countervailing forces continue to pull total listings in opposite directions. Data shows stable declines in total active listings and expect this trend to continue.
  
  Total active listings are pulled in two directions: 1) downward by the sharp drop in new listings, increase in delistings and decrease in the previous momentum of buyer appetite outpacing housing supply; and 2) upward by properties spending more time on the market as buyers who once avidly pounced on for-sale homes now hesitate to make major purchases in an uncertain economy. On balance, we think total active listings will continue to decline, but at a very gradually slowing pace. Weekly data show total active listings declined 15% compared to a year ago, with the pace of declines remaining nearly constant since mid March.

Buyers and sellers holding back in response to COVID

In addition to it’s weekly listings data, realtor.com conducted a quick survey of its users from April 15-17 and here are a few key findings.

• 38% of buyers are looking to postpone their home purchase citing the economy and worries about the ability to tour homes.
• Buyers claim to be spending more time on real estate sites/apps. Floor plans and detailed property information top their list of asks from these providers
• 77% of the sellers surveyed are also looking to buy a home. More than half of those had neither listed their home yet nor found a home to buy

*Some data points for Los Angeles and Las Vegas have been excluded due to data unavailability.

Weekly Housing Trends View–Data Week April 18, 2020

Mortgage rates went up slightly this week — an indication that mortgage firms are changing their lending operations in response to the coronavirus.

The 30-year fixed-rate mortgage averaged 3.33% during the week ending April 16, representing an increase of two basis points from a week ago, Freddie Mac FMCC, reported Thursday. 

The 15-year fixed rate mortgage increased six basis points to an average of 2.86%. The 5-year Treasury-indexed hybrid adjustable rate mortgage, meanwhile, fell six basis points over this last week, averaging 3.28%.

Mortgage rates rose this week in spite of the 10-year Treasury note’s yield TMUBMUSD10Y, 0.602% , which fell in response to major volatility in energy markets globally. Historically, mortgage rates have roughly followed the direction of long-term bond yields, but that relationship has weakened amid the coronavirus crisis.

“While investors kept bond rates at historic levels under 1.0 percent, mortgage rates did not follow on a downward arc due to the fact that banks and lenders are pricing loans for the higher risk they are assuming by raising FICO FICO, -0.53% scores and down-payment requirements,” said George Ratiu, senior economist at Realtor.com.

Banks are imposing stricter standards for new borrowers

The rise in rates also comes as lenders are rethinking who they will lend to amid the coronavirus pandemic. “Lenders are announcing more stringent underwriting requirements and exiting some products completely,” said Tendayi Kapfidze, chief economist at LendingTree TREE, +2.38% . “This means many potential homebuyers and those looking to refinance will have greater difficulty accessing credit.”

JPMorgan JPM, +0.05%, one of the country’s largest lenders, has raised the requirements borrowers must meet to be eligible for most new home loans, Reuters first reported last week. Customers will need a credit score of at least 700 to qualify and must have saved funds equivalent to a 20% down payment. 

Amy Bonitatibus, chief marketing officer for JPMorgan Chase’s mortgage business, told Reuters the changes were made “due to economic uncertainty” so that the bank could “more closely focus on serving our existing customers.”

Other mortgage companies have followed suit in tightening certain requirements. And Flagstar FBC, +3.71% which was the 10th largest mortgage lender in the country by total loan volume as of 2018, has raised the minimum credit score for new FHA, VA and USDA purchase loans to 680. For cash-out refinances, the bank now requires that borrowers have at least a 700 credit score.

Depending on the type of loan, that equates to an increase in the minimum credit score of between 20 and 40 points, said Kristy Fercho, executive vice president and president of mortgage at Flagstar Bank.

“JPMorgan is one of the top originators in the market, and they in some ways set the standard for what other lenders are going to do,” Fercho, who is also the vice chairman of the Mortgage Banker Association, said. “And so you pay attention when JPMorgan makes changes like that.”

If a lender doesn’t make changes after one of the largest companies in the industry does so, Fercho said, they risk the possibility of attracting borrowers in worse financial shape who might be more likely to go into default.

‘JP Morgan is one of the top originators in the market, and they in some ways set the standard for what other lenders are going to do.’— Kristy Fercho, president of mortgage at Flagstar Bank

The Federal Housing Finance Agency this week announced that Fannie Mae FNMA, +2.28% and Freddie Mac could buy loans in forbearance — a sign that lenders have been closing mortgages, only for borrowers to soon need to stop making payments because of income loss related to the coronavirus.

Beyond imposing stricter standards in terms of credit scores and down payments, mortgage lenders have taken other steps to prevent the possibility of making risky home loans. 

As part of the underwriting process, lenders are required to verify a borrower’s employment. Typically that’s done around 10 days before the loan is closed, but now some lenders are moving toward doing this verification on the day of closing in response to the tumultuous economic landscape.

“People are losing jobs at such an alarming rate across America that we want to verify the day of closing that they are still employed,” said Mat Ishbia, president and CEO of United Wholesale Mortgage.

Also see:These U.S. housing markets are most vulnerable to a coronavirus downturn

Additionally, United Wholesale Mortgage and Wells Fargo WFC, -1.00% are putting into place different reserve requirements for self-employed borrowers.

Lenders stress that these changes are temporary, and time will tell how quickly mortgage companies return to business as usual. “You just want to make sure that you’re setting people up for success so that they’ll be able to stay in that home,” Fercho said.

https://www.marketwatch.com/story/mortgage-rates-go-up-slightly-as-some-lenders-tighten-restrictions-on-who-qualifies-for-a-home-loan-2020-04-23?siteid=yhoof2&yptr=yahoo

The average monthly payroll calculation is the most important part of the PPP loan application because it not only determines the size of the loan you can apply for, but it’s also the easiest area to make a mistake. We know this because Our Lendee has reviewed thousands of PPP applications in the past few days while discussing the final rule published by the SBAand the application itself with our bank partners. Here is a step-by-step guide as to how to accurately calculate the average payroll number used for the PPP application to ensure that your application is submitted successfully the first time and you get your funding as quickly as possible.

Step 1: Pull the necessary documents.

Although calculating an average monthly payroll number to enter on your application may not be difficult, banks need to see the backup documentation and they will likely prioritize applications that are complete and clearly organized. Payroll registers, tax documents, and even bank statements can be used as documentation for your average monthly payroll calculation. We recommend that you pull documents that are at the intersection of easiest for you and requested by the bank you’re applying to. Keep in mind that the SBA has confirmed that payroll records are sufficient documentation to establish average monthly payroll and we also recommend reading the FAQs published April 7 by the SBA and the Dept. of the Treasury.

Apply for a PPP Loan Now

Payroll Documentation

Generally speaking, you’ll need to pull the annual payroll register by employee, either for 2019 or the last 12 months. The report should show gross wages, tips, vacation and benefits payments, and taxes. If you use a PEO or payroll processing software, many have special PPP reports they created specifically for this program. Additionally, while you’re in your payroll system, we recommend downloading a payroll statement for February as the SBA requires proof of payroll as of 2/15/2020.

Here’s our summary of the PEOs / payroll software providers that have provided tailored reports:

Payroll Provider	Link to Special PPP report
ADP	2020 CARES Act SBA-PPP Reports
Gusto	Paycheck Protection Program Report
Justworks	Paycheck Protection Program Report
Patriot Software	I need payroll data for the SBA PPP
Paychex	What Is the Small Business Paycheck Protection Program?
Paycor	Paycheck Protection Program (PPP)|Infographic|Payroll Protection
TriNet	Your Guide to the CARES Act: How to generate a report for your PPP application

Tax Documentation

In lieu of using payroll documents, some businesses have found it easier to use IRS forms 941, 944, 940 and for those self-employed forms 1040, 1099-MISC. Some banks have also been requesting these, especially Form 941. However, Form 941 has two key issues: 1. Many businesses will not have filed their Q1 2020 Form 941 if using the last 12 months period, and 2. if you use a PEO like ADP, Justworks, or TriNet, those organizations file Form 941 for the businesses they serve and those businesses will not have individual forms. 

In summary, most businesses will be better served using payroll documentation.

Step 2: Calculate your gross average monthly payroll and loan amount.

Now that you have your documents you’ll need to use them to calculate your average monthly payroll for 2019 or the last 12 months which determines the loan amount you’ll be eligible for.  If you’re lucky enough to work with one of the PEOs that has a PPP-specific report then you’ll either have the answer or all the required inputs ready to. No matter what documents you’re using, we created a calculator with references that you can use to help you find your loan amount.

Free PPP Loan Calculator – Google Sheets | MS Excel

Common Mistakes to Avoid

• Time period used: It is important to ensure you are using the correct timeframe when calculating average monthly payroll. Determine whether your business classifies as a regular, seasonal, or new business, and use the timeframe recommended on the PPP application under the “Instructions for Completing This Form” section to calculate your average monthly payroll. Most businesses will use calendar year 2019 but some will want to use the last 12 months—both are acceptable.
• Excluded Expenses: The SBA explicitly excludes the following expenses from being factored into average monthly payroll:
  • Any compensation of an employee whose principal place of residence is outside of the United States.
  • The compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary. More detail on this to follow. 
  • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees.
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

• Employees earning over $100,000: The SBA has issued explicit guidance to exclude any wages paid in excess of $100,000 on an annualized basis to any individual employee. This means that for employees earning greater than $100,000 on an annualized basis, only $100,000 annualized pay ($4,167 on a bi-weekly pay period) can be included in the calculation of monthly payroll. 
• The multiplier: The PPP loan is issued to cover ~10 weeks of monthly payroll expenses (hence the multiplier of 2.5x). Ensure you are correctly calculating (monthly payroll expense x 2.5) to arrive at your requested loan amount.
• Supplemental Documentation: Our recommendation is to submit a brief summary of how you calculated average monthly payroll expense as a supplement to your application. This can be in the form of a simple table in Excel (such as the calculator we provide above). This document should help the bank processing your application to audit your calculation with the goal of expediting the time it takes to approve your loan.

Step 3: Fill in your application and submit.

You can apply through Muevo using our online application and we’ll submit your application to one of our partner banks.  If you have an established relationship with a bank that is accepting applications we encourage you to consider submitting your application through them.

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• National inventory declined by 15.7 percent year-over-year, and inventory in large markets decreased by 17.1 percent.
• The March national median listing price was $320,000, up 3.8 percent year-over-year.
• Nationally, homes sold in 60 days in March, four days more quickly than last year

Realtor.com®’s March housing data release reveals that the U.S. housing market began to show signs of slowing in the second half of March. The year-over-year decline in inventory softened, the number of newly listed properties declined, and prices decelerated compared to earlier in the month. This is the first data-based glimpse into the impact the COVID-19 pandemic could have on residential real estate as the market enters the spring home-buying season.

The total number of homes available for sale continued to decline in March. Nationally, inventory decreased 15.7 percent year-over-year, a faster rate of decline compared to the 15.3 percent year-over-year drop in February. This amounted to a loss of 191,000 listings compared to March of last year. However, the progression of the weekly data showed the year-over-year decline in home inventory hitting a low and softening, which could be an early indicator of slowing buyer activity in response to COVID-19. The week ending March 28th showed a year-over-year decline of 15.2 percent compared to a larger decline of 16.8 percent in the week ending February 29th, the largest decline in our records since April 2015.

The volume of newly listed properties in March decreased by 6.4 percent since last year. The progression of the weekly data also showed hints of changes to inventory volumes that could be linked to COVID-19. In the week ending on March 28th, the volume of newly listed properties decreased by 34.0 percent year-over-year, the biggest decline this year. The declines in newly listed homes could be indicative of initial seller response to COVID-19 restrictions, with more potential sellers reevaluating or postponing the sale. If continued, this could mark the start of further declines in new inventory in April.

Housing inventory in the 50 largest U.S. metros declined by 17.1 percent year-over-year in March. The metros which saw the biggest declines in inventory were Phoenix-Mesa-Scottsdale, AZ (-42.2 percent); Milwaukee-Waukesha-West Allis, WI (-36.2 percent); and San Diego-Carlsbad, CA (-33.4%). Only Minneapolis-St. Paul-Bloomington, MN-WI (+3.6 percent) saw inventory increase over the year.

The typical property was still selling more quickly than last year. Nationally, homes sold in 60 days in March, four days more quickly than March of last year. In the 50 largest U.S. metros, the typical home sold more quickly than the national rate, typically spending 47 days on the market. Properties in Miami-Fort Lauderdale-West Palm Beach, FL; Pittsburgh, PA; and St. Louis, MO-IL; spent the most time on the market, selling in 86, 78 and 65 days, respectively. Meanwhile, properties in San Jose-Sunnyvale-Santa Clara, CA; Denver-Aurora-Lakewood, CO; and Washington-Arlington-Alexandria, DC-VA-MD-WV were scooped up most quickly, spending 24, 26 and 29 days on the market, respectively. 

The median U.S. listing price grew by 3.8 percent, to $320,000 in March, which is a slight deceleration compared to last month, when the median listing price grew by 3.9 percent over the year. The progression of the weekly data showed further hints of deceleration that could be linked to COVID-19. In the week ending on March 28th, the median U.S. listing price only grew by 2.5 percent year-over-year, the slowest pace of growth this year and the slowest since realtor.com began tracking in 2013. The slower gains could be indicative of early market response to economic uncertainty and restrictions to industry activity, along with lower buyer and seller sentiment. If continued, this could mark the start of further deceleration in asking price growth in April.

Listing prices in the largest metros grew by an average of 5.7 percent from last year, a deceleration from the 6.5 percent year-over-year gain seen last month. Of the largest 50 metros, 45 still saw year-over-year gains in median listing prices.  Pittsburgh, PA (+17.9 percent); Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (+14.0 percent); and Memphis, TN-MS-AR (+12.7 percent) posted the highest year-over-year median list price growth in March. The steepest price declines were seen in Dallas-Fort Worth-Arlington, TX (-2.7 percent); Minneapolis-St. Paul-Bloomington, MN-WI (-1.4 percent); and Houston-The Woodlands-Sugarland, TX (-1.4 percent). 

In March, 15.4 percent of active listings saw their listing prices reduced. This share shrank slightly, by 1.6 percent, over the past year. Among the nation’s largest markets, only 6 saw an increase in their share of price reductions compared to last year. Portland-Vancouver-Hillsboro, OR-WA saw the greatest increase in it’s share of price reductions in March, up 6.4 percent. It was followed by Sacramento–Roseville–Arden-Arcade, CA (+4.4 percent) and Milwaukee-Waukesha-West Allis, WI (+4.0 percent).

Metros With Largest Inventory Declines 

Metro	Active Listing Count YoY	Median Listing Price	Median Listing Price YoY	Median Days on Market	Price Reduced Share
Phoenix-Mesa-Scottsdale, Ariz.	-42.2%	$405,000	12.0%	43	24.6%
Milwaukee-Waukesha-West Allis, Wis.	-36.2%	$327,500	2.0%	44	14.4%
San Diego-Carlsbad, Calif.	-33.4%	$749,950	9.6%	36	14.0%
San Jose-Sunnyvale-Santa Clara, Calif.	-31.4%	$1,230,994	12.0%	24	8.1%
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.	-30.7%	$300,000	14.0%	49	16.7%
Cincinnati, Ohio-Ky.-Ind.	-30.4%	$299,950	12.6%	48	15.3%
Denver-Aurora-Lakewood, Colo.	-30.0%	$560,045	9.4%	26	15.9%
Riverside-San Bernardino-Ontario, Calif.	-27.6%	$424,550	4.9%	51	16.7%
Providence-Warwick, R.I.-Mass.	-27.2%	$399,950	8.9%	50	11.0%
Seattle-Tacoma-Bellevue, Wash.	-27.1%	$615,025	0.7%	30	8.1%
Charlotte-Concord-Gastonia, N.C.-S.C.	-26.7%	$350,000	3.0%	44	19.4%
Portland-Vancouver-Hillsboro, Ore.-Wash.	-26.3%	$480,000	0.3%	41	24.6%
Kansas City, Mo.-Kan.	-24.6%	$340,000	7.1%	63	16.4%
Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.	-24.4%	$505,000	9.0%	29	13.6%
Nashville-Davidson–Murfreesboro–Franklin, Tenn.	-24.2%	$378,988	4.2%	35	14.5%
Los Angeles-Long Beach-Anaheim, Calif.	-23.0%	$960,045	N/A	52	11.5%
Baltimore-Columbia-Towson, Md.	-22.7%	$328,495	4.3%	43	18.3%
Virginia Beach-Norfolk-Newport News, Va.-N.C.	-22.5%	$315,050	7.7%	46	12.0%
Cleveland-Elyria, Ohio	-22.2%	$202,450	3.4%	60	16.9%
Rochester, N.Y.	-22.1%	$235,645	9.0%	37	10.4%
Memphis, Tenn.-Miss.-Ark.	-21.7%	$243,500	12.7%	60	15.8%
Austin-Round Rock, Texas	-20.7%	$372,000	3.3%	44	16.5%
Tampa-St. Petersburg-Clearwater, Fla.	-20.4%	$282,050	3.1%	52	26.2%
Sacramento–Roseville–Arden-Arcade, Calif.	-19.8%	$507,159	6.9%	35	15.4%
Las Vegas-Henderson-Paradise, Nev.	-19.7%	$335,050	7.0%	39	17.4%
Buffalo-Cheektowaga-Niagara Falls, N.Y.	-19.2%	$202,550	2.6%	58	12.0%
San Francisco-Oakland-Hayward, Calif.	-19.0%	$960,000	6.0%	30	9.2%
Indianapolis-Carmel-Anderson, Ind.	-19.0%	$280,000	2.4%	54	21.1%
Birmingham-Hoover, Ala.	-18.5%	$259,950	7.3%	57	14.8%
Boston-Cambridge-Newton, Mass.-N.H.	-18.2%	$630,050	9.6%	32	11.5%
Oklahoma City, Okla.	-17.7%	$264,400	7.9%	43	17.6%
Louisville/Jefferson County, Ky.-Ind.	-17.4%	$272,495	0.0%	51	17.6%
Orlando-Kissimmee-Sanford, Fla.	-17.4%	$322,805	5.4%	56	20.2%
Columbus, Ohio	-17.1%	$307,244	9.3%	40	17.4%
Pittsburgh, Pa.	-17.0%	$215,000	17.9%	78	16.4%
St. Louis, Mo.-Ill.	-16.9%	$230,000	3.4%	65	15.7%
Hartford-West Hartford-East Hartford, Conn.	-16.0%	$284,500	5.4%	51	12.2%
Atlanta-Sandy Springs-Roswell, Ga.	-15.4%	$328,840	1.6%	49	16.8%
Raleigh, N.C.	-14.2%	$375,045	3.8%	50	18.8%
Richmond, Va.	-13.7%	$333,300	2.5%	47	15.1%
Jacksonville, Fla.	-13.4%	$320,045	1.7%	58	20.7%
Miami-Fort Lauderdale-West Palm Beach, Fla.	-11.9%	$407,802	2.6%	86	15.2%
Detroit-Warren-Dearborn, Mich	-11.3%	$239,950	1.2%	48	16.8%
New York-Newark-Jersey City, N.Y.-N.J.-Pa.	-10.7%	$569,050	4.8%	57	10.7%
New Orleans-Metairie, La.	-9.8%	$289,050	0.9%	61	16.6%
Dallas-Fort Worth-Arlington, Texas	-9.6%	$342,545	-2.7%	45	21.8%
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.	-8.1%	$328,500	0.7%	43	17.2%
Houston-The Woodlands-Sugar Land, Texas	-4.8%	$313,045	-1.4%	51	20.7%
San Antonio-New Braunfels, Texas	-2.3%	$297,495	-0.5%	59	19.0%
Minneapolis-St. Paul-Bloomington, Minn.-Wis.	3.6%	$373,520	-1.4%	35	11.9%

*Some data points for Los Angeles have been excluded due to data unavailability. 

March 2020 Monthly Housing Market Trends Report: A First Glimpse of COVID-19 Impact on the U.S. Housing Market

NEW YORK (Reuters) – JPMorgan Chase & Co <JPM.N>, the country’s largest lender by assets, is raising borrowing standards this week for most new home loans as the bank moves to mitigate lending risk stemming from the novel coronavirus disruption.

From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.

The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market, after measures to contain the virus put 16 million people out of work and plunged the country into recession.

“Due to the economic uncertainty, we are making temporary changes that will allow us to more closely focus on serving our existing customers,” Amy Bonitatibus, chief marketing officer for JPMorgan Chase’s home lending business, told Reuters.

The bank was the fourth largest U.S. mortgage lender in 2019, according to industry publication Inside Mortgage Finance.

The changes should help JPMorgan reduce its exposure to borrowers who unexpectedly lose their job, suffer a decline in wages, or whose homes lose value. The bank said the change will also free up staff to handle a surge in mortgage refinance requests, which are taking longer to process due to staff working from home and non-essential businesses being closed.

Refinancing requests jumped to their highest level in more than a decade last month as average rates on 30-year fixed-rate mortgages, the most popular home loan, fell to near record lows, according to data from the Mortgage Bankers Association (MBA).

JPMorgan would not disclose the current minimum requirements for its various mortgage products, but the average down payment across the housing market is around 10%, according to the MBA.

The new credit standards do not apply to JPMorgan’s roughly four million existing mortgage customers, or to low and moderate income borrowers who qualify for its “DreaMaker” product, which requires a minimum 3% down payment and 620 credit score.

The U.S. housing market had been on a steady footing earlier this year, but with a deepening recession and would-be home buyers unable to view properties or close purchases due to social distancing measures, the health crisis now threatens to derail the sector.

The residential mortgage market is already under strain after borrower requests to delay mortgage payments rose 1,900% in the second half of March, Reuters reported.

The National Association of Realtors last month said home sales could fall by around 10% in the short-term, compared to historical sales for this time of year. A Federal Reserve March consumer survey said home prices were expected grow 1.32% over the year, the lowest reading since the survey began in 2013.

https://www.yahoo.com/finance/news/exclusive-jpmorgan-chase-raise-mortgage-221128934.html

March 2020 Hottest Housing Markets

APRIL 9, 2020

Colorado Springs maintains hottest housing market status as national market shifts in response to COVID-19 pressure.

• Colorado Springs reclaims the number 1 rank of hottest housing market for the second consecutive month.
• California metros continue to dominate with ten markets appearing in the top 20 this month.
• The Columbus, OH metro area has seen the largest increase in its hotness ranking among larger metros over the past year.

With the spring home buying season ready to jump into full swing, the entire housing market seemed to pivot in response to COVID-19 in March. While in-person behaviors may have affected buyers’ willingness to visit homes in person, the hottest housing markets were still garnering listing views and closing sales throughout March. Going forward, however, it’s worthwhile to keep an eye on which markets are retaining the attention of homeowner hopefuls as the uncertainty subsidies and the housing market regains its pace.

In March, Colorado Springs, CO retained the title of hottest housing market in the country for the second consecutive month. Originally garnering attention as a spillover market from Denver, this metro has frequently appeared on our list of hottest housing markets, and this represents the third time on record that it has reached number one. Half of all homes in Colorado Springs were selling in under 28 days — nine days faster than last year, and 32 days faster than the rest of the country. Properties in the metro garnered 2.4 times as many views than the average property around the United States. Colorado Springs was the only metro from Colorado on the list of hottest markets.

As a group, Realtor.com’s 20 Hottest Housing Markets received 1.8 to 3.0 times the number of views per home for sale compared to the national rate. These markets are seeing homes for sale move 28 to 47 days more quickly than the typical property in the United States overall. 

Ten states were represented in the top 20 list, including California, Colorado, Connecticut, Indiana, Kansas, Massachusetts, New Hampshire, New York, Ohio, Washington, and Wisconsin. California dominated the hotness list, with seven markets represented, followed by New Hampshire, with three markets represented.

March’s Top 20 Hottest Housing Markets

Metro	Rank (March 2020)	Rank (March 2019)	Views Per Property YoY	Days on Market	Days on Market YoY	Median Listing Price	Median Listing Price YoY
Colorado Springs, CO	1	3	18%	28	-13	465,273	13%
Modesto, CA	2	8	26%	33	-9	392,450	10%
Manchester-Nashua, NH	3	7	0%	38	-13	387,450	6%
Rochester, NY	4	6	3%	37	-10	235,645	9%
Lafayette-West Lafayette, IN	5	11	1%	37	-14	286,450	27%
Fort Wayne, IN	6	38	-13%	39	-25	246,500	14%
Columbus, OH	7	61	-3%	40	-28	307,244	9%
Topeka, KS	8	40	29%	38	-19	152,450	15%
Vallejo-Fairfield, CA	9	10	16%	33	-3	480,050	2%
Sacramento–Roseville–Arden-Arcade, CA	10	5	-2%	35	-9	507,159	7%
Boston-Cambridge-Newton, MA-NH	11	4	-11%	32	-11	630,050	10%
Fresno, CA	12	20	25%	40	-4	334,025	9%
Yuba City, CA	13	18	-12%	42	-14	369,950	13%
Spokane-Spokane Valley, WA	14	21	-3%	40	-16	377,050	10%
Stockton-Lodi, CA	15	9	10%	38	-3	437,800	8%
Dayton, OH	16	22	14%	43	-10	184,995	23%
Milwaukee-Waukesha-West Allis, WI	17	25	15%	44	-9	327,500	2%
Concord, NH	18	75	22%	47	-22	330,000	2%
Bakersfield, CA	19	27	15%	42	-6	275,000	9%
Worcester, MA-CT	20	55	-3%	42	-22	358,550	8%

Columbus leads most improved large markets

Larger urban markets continue to cool down in the rankings, with the largest 40 markets across the country dropping by 9 spots, on average, since last year. Western markets collectively improved 3 spots on average over the past year, compared to a decline of 8 spots for midwestern markets, a decline of 23 spots for southern markets, and a decline of 5 spots for northeastern markets Western markets collectively improved 3 spots on average over the past year, an improvement compared to last month’s drop of 1 spot on average. Midwestern markets saw an average decline of 8 spots, although an improvement compared to the drop of 12 spots last month.

March 2020 Hottest Housing Markets

The housing market is in uncharted waters as COVID-19 continues to upset every aspect of the industry, from see-sawing mortgage rates to canceled open houses due to social distancing rules.

With the chaos and confusion comes a certain amount of unpredictability, a recurring theme among the experts asked to forecast trends for the second quarter of 2020.

The possibilities of what might happen with the housing market, as well as the economy, run the gamut. The answers will be dictated by the virus itself.

— Greg McBrideCFA, Bankrate chief financial analyst

What is certain is that the spring homebuying season will look different than the business-as-normal situation that everyone anticipated at the beginning of the year. Here experts break down five trends consumers should keep an eye on going into the second quarter of this pandemic-plagued year.

• Trend 1: Homebuying will dip for spring
• Trend 2: Homes values will hold steady if COVID-19 is short-lived
• Trend 3: Mortgage rates will likely drop even more
• Trend 4: Refinances will continue to increase
• Trend 5: Digital technology will become even more relevant

Trend 1: Homebuying will dip for spring

The spring homebuying season is headed for a slowdown that will last, at minimum, until summer, experts predict. As the housing gears grind to a halt, fewer people are applying for home loans, a trend that will deepen as Americans stay home by the tens of millions.

Purchase loans fell 10 percent from last week and 24 percent from this time last year in the week ending March 27, according to data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey. This drop in purchase loans comes as no surprise as people are asked to shelter in place making it difficult to complete the homebuying process.

Meanwhile, the refinance share of mortgage applications shot up by 26 percent, reflecting the eagerness of homeowners to lock in low rates amid a volatile mortgage environment. In some of the COVID-19 hotspots, mortgage applications were up, but most were likely refinances given the drop in purchases, according to a spokesperson for MBA. New York saw a 16 percent increase and California was up by 18 percent.

The reasons for an anticipated Q2 slowdown are both logistical and economical.

Currently, 75 percent of the country, or 250 million Americans, have been asked to shelter in place. This makes the homebuying and selling process difficult, if not impossible.

Mortgage originations depend on multiple parties, including government entities (which are involved in everything from recording deeds to title searches); so, closed government offices can mean stalled sales.

“If the title companies are unable to record the mortgages and complete their required work due to county and state office closures, loans may be unable to close,” says Heidi Lombardi, licensed mortgage loan originator for American Mortgage in Tampa, Florida.

Likewise, as COVID-19 continues to spread, more appraisers and inspectors will be forced to stop visiting sites, which means lenders won’t be able to fund mortgages.

In strong markets, like Manhattan, which has been one of the hardest-hit areas, listings were down 85 percent at the end of March compared with the same time last year, according to data from UrbanDigs.

“I expect to see a significant decrease in the second-quarter numbers, as will the majority of other businesses, too,” says Rich Schulhoff, CEO of Brooklyn MLS. “Open houses are not allowed and showings have gone virtual. Appraisals are proceeding with limitations. Some appraisers, if allowed by the homeowners, are going into homes while maintaining their distance.”

But the damage may be short-lived

The economic impact will also play a major role in a weak spring homebuying season. A record 3.33 million Americans had filed for unemployment benefits by March 21, and the numbers keep rising. Mass layoffs have created uncertainty, which will trigger lender pullback as well as force some potential homebuyers out of the market, at least for the time being.

The pandemic has penetrated almost every industry, throttling major companies, which has impacted workers all over the country. Marriott, one of the largest hotel chains in the world, is furloughing tens of thousands of workers, and airlines are issuing temporary layoffs of up to 90 percent of their staff.

“While the majority of workers who are being hit hard by the abrupt shutdown of economic activities are generally hourly workers who would not necessarily be in the market to buy a home, the impact has been spreading to salaried workers as well,” says Selma Hepp, deputy chief economist at CoreLogic. “It seems that potential homebuyers who were working in the industries that were most affected will most likely put off the homebuying decision. Also, the volatility in the financial markets will have a negative wealth effect on the higher-earning population.”

The market was strong prior to the pandemic, which could mean that the usually hot spring homebuying season isn’t canceled, but pushed back to autumn, says Lawrence Yun, chief economist at the National Association of Realtors.

“Worth noting that, unlike 2008, there is no subprime lending and overproduction by home builders. Sales will tumble for a few months but prices will hold on. With the stimulus package, any lost sales are likely to show up as a delayed transaction in the second half of the year,” Yun says.

Trend 2: Homes values will hold steady if COVID-19 is short-lived

Homeowners have seen their property value steadily rise, amassing record levels of home equity. In 2019, homeowners with mortgages (approximately 63 percent of all properties) got a notable 5.4 percent year-over-year bump in their home equity, totaling about $489 billion since the fourth quarter of 2018. An average family, with a mortgage, had a total of $177,000 in home equity at the end of 2019, according to data analysis by CoreLogic.

One question for homeowners is what will happen to their property values during this crisis. The answer is uniform across the board: It depends on how long the pandemic lasts. In the short-term, experts agree that prices will flatten, but the long-term effects depend on how deep the shutdown from the virus cleaves into our economy, which could mean the difference between a recession and a depression.

If the impact is limited, with the level of infections dropping dramatically within the next four to six weeks, the recession should be six to nine months in length and the impact on home price depreciation limited,” says Pat Stone, executive chairman and founder of Williston Financial Group in Portland, Oregon. “Should the pandemic extend and homebuying remain depressed, we will see noticeable declines in home prices. In either scenario, once we regain upward economic momentum, home price appreciation will regain pace.”

Another possibility is that only the most afflicted areas will experience a hit to home prices, especially if that area’s economic drivers (hospitality, for instance) are distressed.

Signs are good, however, for a full rebound, Hepp says, citing pent-up demand and very limited for-sale inventory across the country as two indicators that the market is poised for a strong recovery.

Low mortgage rates will also help bolster home sales as activity resumes, which will help keep home prices up. Also, if sellers can wait to sell, then they might maximize their profit if the economy gets back on track by fall.

“For Q2, I expect much lower volume of course, but not an immediate dramatic impact to pricing,” says Todd Teta, chief product officer at ATTOM Data Solutions. “Some sellers will panic and take lower prices; some will take dramatic discounts; most sellers will wait it out.”

Trend 3: Mortgage rates will likely drop even more

Mortgage rates have been on a roller coaster, whipsawing experts and consumers alike. Untethered by normal market levers, such as following the plummeting yields of the 10-year Treasury note, rates have risen and fallen seemingly unpredictably. In retrospect, the reasons are more apparent.

With rates touching new lows, the lender pipelines became clogged, and lenders had to raise rates to stave off more business from people who wanted to refinance or lock in a purchase loan. The erratic rate movement in March occurred as lenders were shying away from mortgage-backed securities, or MBS. Lenders typically trade these securities to hedge their risk of rates changing between the time a borrower makes an application and the closing. The MBS market froze up as the financial markets cratered and buyers became scarce.

In response, the Federal Reserve has employed quantitative easing, or QE, by injecting billions into the MBS market, to ensure that mortgage rates stay low. The Fed has written a blank check, promising to buy billions in agency MBS, which come from Ginnie Mae, Fannie Mae and Freddie Mac.

Experts say this move will help put mortgage rates back into balance, helping to push them into the low 3 percent range during Q2.

“With many policies the Federal Open Market Committee (FOMC) has put in place to ensure the continuation of economic activity and market liquidity, mortgage rates are likely to reach new lows in the coming weeks and months,” Hepp says. “The recent stress put on the financial system led to a bump in rates in recent weeks, but the rates should drift down again. Heightened uncertainty is causing a large variance in mortgage rates forecast through 2021, though many expect the rates on 30-year fixed-rate mortgage to hover around 3 percent or fall lower.”

Trend 4: Refinances will continue to increase

As mortgage rates fall, the number of homeowners who can save money by refinancing expands.  If, for example, rates fall to 3 percent, some 19.4 million homeowners will be refi eligible, according to mortgage data analysis by Black Knight.

Moreover, the incentive to refinance climbs with the amount of money borrowers can save. Currently, 50 percent of outstanding mortgage debt has an interest rate of more than 4 percent, while 24 percent of borrowers have interest rates north of 4.5 percent, according to CoreLogic.

Prepayments rose by 8 percent in January as refinance activity picked up speed, according to Black Knight, and this momentum isn’t expected to slow.

“I’d summarize that the second quarter is going to continue to see a wave of refinancing applications,” McBride says.

Equity-rich homeowners might consider cash-out refinancing as an option if their income was impacted by the coronavirus, McBride adds, especially for those who are long on equity but short on savings.

However, lenders will still run credit and employment checks, so borrowers who are out of work probably won’t qualify for cash-out refinancing.

“COVID-19 could affect cash-out and home equity lending later in the year if housing prices decline because borrowers will have less available equity,” says Jerry Schiano, founder and CEO of Spring EQ in Philadelphia. “That said, program guides have been cut and if people have a cash need for future home improvements or major expenses like weddings or tuition, and they are still employed, I would suggest borrowing now. If they are unemployed the loans won’t close.”

Trend 5: Digital technology will become even more relevant

In a contactless society, contactless technology is king. Lenders and borrowers, forced to keep their distance due to COVID-19, are now relying on a host of remote technology options to conduct business.

It’s now more important than ever for both private companies and government agencies to begin adopting widely accessible online tools like e-signatures, mobile image capture, digital documentation, automated valuation models, remote online notarization and e-closings. Those who don’t will get left behind, experts warn.

“Given the surge in refi demand appraisers are high in demand. Inspections require creativity, like pictures along with a discount mitigation,” says Jarred Kessler, CEO at EasyKnock, a proptech company that offers sale-leaseback of homes. “The bigger, and more frustrating issue, is many counties have not adapted to e-signatures and there is no better time than now to approve it while some court systems are shut down.”

Buyers and sellers are also using video technology to show houses, which can be especially helpful for buyers who have to move due to job relocations, for example.

“Right now, no one wants people in their homes, so interest in video tours has shot up while open houses have been canceled,” says Ilyce Glink, the author of “100 Questions Every First-Time Home Buyer Should Ask.” “Closings are now happening virtually or in drive-by mode, where buyers don’t even get out of their cars. I think you’ll see a lot more of that.”

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Economic Injury Disaster Loan (EIDL) Existing Program 

• Click Here To Apply
  Loan Amounts up to $2,000,000
• 3.75% Interest rate for For-Profit Businesses
• 2.75% Interest rate for Non-For-Profit Businesses
• Loan Terms will not exceed 30 Years 
• Collateral required is only when the loan is over $25,000
• Credit History: Must be acceptable to SBA and show the ability to repay.
• Only available in states with SBA approved declarations of disaster.  Check to see if your area is on the list, click here.
• If you receive the EIDL, you will not be eligible for the SBA 7(a) Relief Loan

*Our sources indicate that there are currently over 25,000 applications submitted so far, with at least 3-weeks  for approvals to be processed. It can be assumed that approval times will only increase as more applicants apply

Get a $10,000 Emergency Advance 

You can get up to a $10,000 grant from the SBA for your small business while you wait for your larger CARES Act Paycheck Protection Program (PPP) Loan or SBA Economic Injury Disaster Loan (EIDL) Follow the below steps:

• Go to https://covid19relief.sba.gov/#/
• Fill out the application
• On the page titled “Additional Information”, make sure to click on “I would like to be considered for an advance of up to $10,000”
• Complete application

*This grant provides an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL).  

**If you’ve applied for CARES Act PPP financing with us, your place is safe in our queue. Although your application is on-hold pending SBA guidance, we are working diligently to complete your file for an assignment, underwriting, and funding as soon as possible.

SBA 7(a) Relief Loan (Paycheck Protection Program) New Program – CARES Act 

• Click Here To Apply
  Loan amounts up to $10,000,000**
• .5% Interest rate for For-Profit and Non-For-Profit businesses
• 2 year full payout loan, and payments may be deferred for 6 months
• Unsecured and no personal guarantee
• No minimum credit score requirements
• Eligible for loan forgiveness***
• Can only be used for payroll support including medical leave, costs related to health benefits, employee salaries, mortgage payments, rent, utilities, insurance, and any other debt payments incurred before 2/15/2020
• No prepayment penalties
• SBA guarantee fees and lender fees are waived

*A borrower with a current EIDL loan can only also receive the SBA 7(a) Relief loan if the EIDL loan is unrelated to COVID-19

**The maximum loan amount is the lesser of $10,000,000 or the product obtained by multiplying average total monthly payments for payroll costs during the 1-year period before the loan is made by 2.5. So if the loan was made on April 1, 2020, and average monthly payroll costs for the period April 1, 2019, to April 1, 2020, were $1,500,000, the maximum loan amount would be $3,750,000. Payroll amounts over $100,000 per person, will be excluded from the calculation

***Small businesses that take out these loans can get some or all of their loans forgiven. As long as employers continue paying employees at normal levels during the eight weeks following the origination of the loan, then the amount they spent on payroll costs (excluding costs for any compensation above $100,000 annually), mortgage interest, rent payments and utility payments can be combined and that portion of the loan will be forgiven. Any loan amounts not forgiven at the end of one year are carried forward as an ongoing loan with terms of a max of 10 years at 4% interest. The 100% loan guarantee remains intact.