A housing crash in 2021?

One thing that the real estate industry has in common with the stock market is the shouting contest between starry eyed optimists, who always see prices moving up, and the doomsayers who foresee the crash of the century just around the corner.
Obviously, Covid has brought the latter in droves.
The doomsayers thesis has the merit of simplicity: since Covid brought rising unemployment, the market should have crashed in 2020. But as forbearance has been extended to borrowers, as soon as that forbearance is going to come to an end, we will see prices crashing crashing by 20, 30 or 50%. Therefore, the crash of 2020 is now the impending crash of 2021.
They really had to tweak their thesis: In fact, in 2020, median home sales prices have made the largest increase on record, jumping 15% year-over-year for the week ending October 4. The previous largest increase was 14.5% way back in September 2005 during the housing bubble.
To account for a 30 to 50% house price crash, we would need about 10 million loans to go bad, which is what we experienced back in 2008 when 10 million loans went delinquent.The fact of the matter is that actually data released recently show that the number of loans in forbearance is now standing at less than 3 million and that it felt 18%. Instead of growing, that number is actually shrinking.
In 2008, most borrowers in difficulty had very little equity in their home as lax lending standards allowed people to finance homes with no money down. Furthermore, between 2003 and 2006 we experienced a cash-out boom where people were using their home as an ATM, to buy SUVs and big screen TVs, extracting what little equity they had. That made up for a very fragile market.
Today’s situation is vastly different. Most borrowers started with some equity in their home due to stricter lending standards: 20% down is pretty standard. Furthermore, since 2012, house price rises have increased that equity position. And finally, whoever is elected in November is very likely to extend the forbearance period.
Three additional factors make a crash very unlikely, first of all, the US has now the most favorable demographic situation for housing demand due to strong household formation.
Second, COVID-induced work/school from home and shifting demand favoring suburban homes sustain home mobility. Third and quite importantly, mortgage rates are at an all time low. The average US mortgage rate for 30 year fixed loan is 2.87% this week, one basis point (0.01%) away from the all-time low set in mid-September.
For all those reasons, the forbearance crash of 2021 is very likely to join all the failed prediction that doomsayers have been spelling out over the years.
History is replete with examples of their doom and gloom calls that failed to materialize. There is no reason to think that this time will be different.