Godzilla wrote:
“...Currently, it is being reported that 11% of All U.S. Mortgages are in forbearance. Given the risk mortgage companies are facing right now, many lenders have imposed more stringent requirements for loan applicants. Activity has leveled out following the extreme activity in April, providing hope that things won’t get worse, but it is still a delicate balance as with most of the economy, it won’t be able to handle another hit. ...”
And higher requirements for loans means fewer approvals, and fewer houses sold.
Fewer buyers would do what to the house values?
supply and demand would drop prices. But that is only half the equation. The other half would be the inability to get a loan for those cheaper homes. Companies would not be able to sell homes they built - resulting in bankruptcies and cut backs, adding to unemployment numbers and more foreclosures. vicious circle.
Seeing something similar in the oil market. more expensive to extract oil killing companies because no one is buying oil.