es will stay flat or decrease slightly as the economy ramps up. Investors are waiting for their opportunity to snap up discounted inventory, adding to demand. Q2-Q4 2021 Forecast: +0 percent to +5 percent Disclaimer: The variability around this forecast is wide and dependent upon data available as of May 2020. The severity and duration of the COVID-19 epidemic, as well as the response of the public and policymakers, continues to change daily. Rental Rates Rents for single family properties declined a modest 11 percent from 2008 to the spring 2014 lows of $975, around -2 percent per year. Since the lows in 2014, rent prices have rapidly appreciated 30 percent over the last six years. As of April 2020, the average three-bedroom, single-family rental home in the Kansas City MSA is $1,285/mo. Metro area one-year change for a three-bedroom de- tached SFR is up 7.6 percent, a $90 annual increase.
bearance extension may affect prices by adding inventory at discounted prices. Reopening economies and ongoing protest gatherings have shown a small rise in COVID-19 cas- es, and medical professionals con- tinue to warn of a further resurgence in cases in the fall-winter flu-season period, which could restrict the economy and damper consumer sentiment further. Q4 2020 - Q1 2021 Forecast: -5 per- cent to -2 percent Analysts forecast the economy to recover by Q4-20 to Q1-21, although we expect unemployment to remain elevated near eight percent into early 2021. For those who do not qualify for an extension, the 6-month GSE- backed loan forbearance period ex- pires in the fall (plus six months for foreclosure proceedings). The even- tual rise in foreclosures will have negative effects on home values. Mortgage interest rates should stay low through next year and em- ployment will begin to stabilize. Wag-
economy should lift prices slightly higher in the next few months. Conversely, while supply is lower, demand has also decreased due to market uncertainty, reduction in wages, increased qualifications for loan approval, and the sharp increase in unemployment limits the number of potential buyers in the area. We forecast the supply and de- mand balance to be evenly balanced in the summer months, leading to flattening price growth. Q3 2020 Forecast: +2 percent to +4 percent Heading into winter of 2020, the tighter lending restrictions, a slow recovery for the job market, season - al slowing of market demand, and increasing defaults from non-GSE loans are challenges continuing to weigh on real estate prices. Buyers and investors will be expecting to find deals at a discount, and this sentiment will put downward pres- sure on prices. Those who do not qualify for a for-
Current Rent Price
Rent vs Income
Current Home Price
© 2020 Mapbox © OpenStreetMap
© 2020 Mapbox © OpenStreetMap
© 2020 Mapbox © OpenStreetMap
3Bd SFR Rental Price
Rent Vs Income Ratio
SFR Home Price
$1,100
$1,600
20.0%
35.0%
$120,000
$300,000
76 | think realty magazine :: august 2020
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