One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say.
Jerome Powell, Federal Reserve Chairman
“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year…
So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that.I’m highly confident of that. And it won’t take that long to get there.”
Nonpartisan Analysis for the U.S Congress
“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”
Neel Kashkari, President, Minneapolis Federal Reserve Bank
“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”
We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later.
During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.
The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, let’s connect today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.
Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone. This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:
“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”
What does the survey indicate about sellers?
Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes once stay-at-home orders are lifted and they feel more confident, which means more homes will start to be available for interested buyers.
Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:
“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”
What does the survey note about buyers?
The recent pandemic has clearly impacted buyer preferences, showing:
- 5% of the respondents said buyers are shifting their focus from urban to suburban areas.
- 1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.
- Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.
As we’ve mentioned before, buyer demand is strong right now, and many are simply waiting for more inventory to become available so they can make a move, especially as the country begins to reopen.
If you’re thinking about putting your house on the market, let’s connect today. There’s a good chance an eager buyer is looking for a home just like yours.
Tomorrow, the unemployment rate for April 2020 will be released by the U.S. Bureau of Labor Statistics. It will hit a peak this country has never seen before, with data representing real families and lives affected by this economic slowdown. The numbers will alarm us. There will be headlines and doomsday scenarios in the media. There is hope, though, that as businesses reopen, most people will become employed again soon. Last month’s report indicated we initially lost over 700,000 jobs in this country, and the unemployment rate quickly rose to 4.4%. With the release of the new data, that number will climb even higher. Experts forecast this report will show somewhere between a 15% – 20% national unemployment rate, and some anticipate that number to be even greater (see graph below):
What’s happened over the last several weeks?
Here’s a breakdown of this spring’s weekly unemployment filings:
The good news shown here indicates the number of additional unemployment claims has decreased week over week since the beginning of April. Carlos Rodriguez, CEO of Automatic Data Processing (ADP) says based on what he’s seeing:
“It’s possible that companies are already anticipating some kind of normalization, opening in certain states and starting to post jobs.”
He goes on to say that this doesn’t mean all companies are hiring, but it could mean they are at the point where they’re not cutting jobs anymore. Let’s hope this trend continues.
What will the future bring?
Most experts predict that while unemployment is high right now, it won’t be that way for long. The length of unemployment during this crisis is projected to be significantly shorter than the duration seen in the Great Recession and the Great Depression.
While forecasts may be high, the numbers are trending down and the length of time isn’t expected to last forever.
Don’t let the headlines rattle you. There’s hope coming as we start to safely reopen businesses throughout the country. Unemployment affects our families, our businesses, and our country. Our job is to rally around those impacted and do our part to support them through this time.
With all of the unanswered questions caused by COVID-19 and the economic slowdown we’re experiencing across the country today, many are asking if the housing market is in trouble. For those who remember 2008, it’s logical to ask that question. Many of us experienced financial hardships, lost homes, and were out of work during the Great Recession – the recession that started with a housing and mortgage crisis. Today, we face a very different challenge: an external health crisis that has caused a pause in much of the economy and a major shutdown of many parts of the country. Let’s look at five things we know about today’s housing market that were different in 2008.
When we look at appreciation in the visual below, there’s a big difference between the 6 years prior to the housing crash and the most recent 6-year period of time. Leading up to the crash, we had much higher appreciation in this country than we see today. In fact, the highest level of appreciation most recently is below the lowest level we saw leading up to the crash. Prices have been rising lately, but not at the rate they were climbing back when we had runaway appreciation.
2. Mortgage Credit
The Mortgage Credit Availability Index is a monthly measure by the Mortgage Bankers Association that gauges the level of difficulty to secure a loan. The higher the index, the easier it is to get a loan; the lower the index, the harder. Today we’re nowhere near the levels seen before the housing crash when it was very easy to get approved for a mortgage. After the crash, however, lending standards tightened and have remained that way leading up to today.
3. Number of Homes for Sale
One of the causes of the housing crash in 2008 was an oversupply of homes for sale. Today, as shown in the next image, we see a much different picture. We don’t have enough homes on the market for the number of people who want to buy them. Across the country, we have less than 6 months of inventory, an undersupply of homes available for interested buyers.
4. Use of Home Equity
The chart below shows the difference in how people are accessing the equity in their homes today as compared to 2008. In 2008, consumers were harvesting equity from their homes (through cash-out refinances) and using it to finance their lifestyles. Today, consumers are treating the equity in their homes much more cautiously.
5. Home Equity Today
Today, 53.8% of homes across the country have at least 50% equity. In 2008, homeowners walked away when they owed more than what their homes were worth. With the equity homeowners have now, they’re much less likely to walk away from their homes.
The COVID-19 crisis is causing different challenges across the country than the ones we faced in 2008. Back then, we had a housing crisis; today, we face a health crisis. What we know now is that housing is in a much stronger position today than it was in 2008. It is no longer the center of the economic slowdown. Rather, it could be just what helps pull us out of the downturn.