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Will Surging Unemployment Crush Home Sales?

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Ten million Americans lost their jobs over the last two weeks. The next announced unemployment rate on May 8th is expected to be in the double digits. Because the health crisis brought the economy to a screeching halt, many are feeling a personal financial crisis. James Bullard, President of the Federal Reserve Bank of St. Louis, explained that the government is trying to find ways to assist those who have lost their jobs and the companies which were forced to close (think: your neighborhood restaurant). In a recent interview he said:

“This is a planned, organized partial shutdown of the U.S. economy in the second quarter. The overall goal is to keep everyone, households and businesses, whole.”

That’s promising, but we’re still uncertain as to when the recently unemployed will be able to return to work.

Another concern: how badly will the U.S. economy be damaged if people can’t buy homes?

A new concern is whether the high number of unemployed Americans will cause the residential real estate market to crash, putting a greater strain on the economy and leading to even more job losses. The housing industry is a major piece of the overall economy in this country.

Chris Herbert, Managing Director of the Joint Center for Housing Studies of Harvard University, in a post titled Responding to the Covid-19 Pandemic, addressed the toll this crisis will have on our nation, explaining:

“Housing is a foundational element of every person’s well-being. And with nearly a fifth of US gross domestic product rooted in housing-related expenditures, it is also critical to the well-being of our broader economy.”

How has the unemployment rate affected home sales in the past?

It’s logical to think there would be a direct correlation between the unemployment rate and home sales: as the unemployment rate went up, home sales would go down, and when the unemployment rate went down, home sales would go up.

However, research reviewing the last thirty years doesn’t show that direct relationship, as noted in the graph below. The blue and grey bars represent home sales, while the yellow line is the unemployment rate. Take a look at numbers 1 through 4:Will Surging Unemployment Crush Home Sales? | Simplifying The Market

  1. The unemployment rate was rising between 1992-1993, yet home sales increased.
  2. The unemployment rate was rising between 2001-2003, and home sales increased.
  3. The unemployment rate was rising between 2007-2010, and home sales significantly decreased.
  4. The unemployment rate was falling continuously between 2015-2019, and home sales remained relatively flat.

The impact of the unemployment rate on home sales doesn’t seem to be as strong as we may have thought.

Isn’t this time different?

Yes. There is no doubt the country hasn’t seen job losses this quickly in almost one hundred years. How bad could it get? Goldman Sachs projects the unemployment rate to be 15% in the third quarter of 2020, flattening to single digits by the fourth quarter of this year, and then just over 6% percent by the fourth quarter of 2021. Not ideal for the housing industry, but manageable.

How does this compare to the other financial crises?

Some believe this is going to be reminiscent of The Great Depression. From the standpoint of unemployment rates alone (the only thing this article addresses), it does not compare. Here are the unemployment rates during the Great Depression, the Great Recession, and the projected rates moving forward:Will Surging Unemployment Crush Home Sales? | Simplifying The Market

Bottom Line

We’ve given you the facts as we know them. The housing market will have challenges this year. However, with the help being given to those who have lost their jobs and the fact that we’re looking at a quick recovery for the economy after we address the health problem, the housing industry should be fine in the long term. Stay safe.

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For Buyers

The Truth About Where Home Prices Are Heading

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There are plenty of headlines these days calling for a housing market crash. But the truth is, they’re not telling the full story. Here’s what’s actually happening, and what the experts project for home prices over the next 5 years. And spoiler alert – it’s not a crash.

Yes, in some local markets, prices are flattening or even dipping slightly this year as more homes hit the market. That’s normal with rising inventory. But the bigger picture is what really matters, and it’s far less dramatic than what the doom-and-gloom headlines suggest. Here’s why.

Over 100 leading housing market experts were surveyed in the latest Home Price Expectations Survey (HPES) from Fannie Mae. Their collective forecast shows prices are projected to keep rising over the next 5 years, just at a slower, healthier pace than what we’ve seen more recently. And that kind of steady, sustainable growth should be one factor to help ease your fears about the years ahead (see graph below):

a graph with green barsAnd if you take a look at how the various experts responded within the survey, they fall into three main categories: those that were most optimistic about the forecast, most pessimistic, and the overall average outlook.

Here’s what the breakdown shows:

  • The average projection is about 3.3% price growth per year, through 2029.
  • The optimists see growth closer to 5.0% per year.
  • The pessimists still forecast about 1.3% growth per year.

Do they all agree on the same number? Of course not. But here’s the key takeaway: not one expert group is calling for a major national decline or a crash. Instead, they expect home prices to rise at a steady, more sustainable pace.

That’s much healthier for the market – and for you. Yes, some areas may see prices hold relatively flat or dip a bit in the short term, especially where inventory is on the rise. Others may appreciate faster than the national average because there are still fewer homes for sale than there are buyers trying to purchase them. But overall, more moderate price growth is cooling the rapid spikes we saw during the frenzy of the past few years.

And remember, even the most conservative experts still project prices will rise over the course of the next 5 years. That’s also because foreclosures are low, lending standards are in check, and homeowners have near record equity to boost the stability of the market. Together, those factors help prevent a wave of forced sales, like the kind that could drag prices down. So, if you’re waiting for a significant crash before you buy, you might be waiting quite a long time.

Bottom Line

If you’ve been on the fence about your plans, now’s the time to get clarity. The market isn’t heading for a crash – it’s on track for steady, slow, long-term growth overall, with some regional ups and downs along the way.

Want to know what that means for your neighborhood? Because national trends set the tone, but what really matters is what’s happening in your zip code. Connect with a real estate agent to have a quick conversation so you can see exactly what the local data means for you. 

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Equity

Selling and Buying at the Same Time? Here’s What You Need To Know

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If you’re a homeowner planning to move, you’re probably wondering what the process is going to look like and what you should tackle first:

  • Is it better to start by finding your next home?
  • Or should you sell your current house before you go out looking?

Ultimately, what’s right for you depends on a lot of factors. And that’s where an agent’s experience can really help make your next step clear.

They know your local market, the latest trends, and what’s working for other homeowners right now. And they’ll be able to make a recommendation based on their expertise and your needs.

But here’s a little bit of a sneak peek. In many cases today, getting your current home on the market first can put you in a better spot. Here’s why that order tends to work best (and how an agent can help).

The Advantages of Selling First

1. You’ll Unlock Your Home Equity

Selling your current home before you try to buy your next one allows you to access the equity you’ve built up – and based on home price appreciation over the past few years, that’s no small number. Data from Cotality (formerly CoreLogic) shows the average homeowner is sitting on $302K in equity today.

And once you sell, you can use that equity to pay for the down payment on your next house (and maybe even more). You could even have enough to buy your next house in cash. That’s a big deal, and it could make your next move a whole lot easier on your wallet.

2. You Won’t Be Juggling Two Mortgages

Trying to buy before you sell means you could wind up holding two mortgages, even if just for a few months. That can get expensive, fast – especially if there are unexpected repairs or delays. Selling first removes that stress and helps you move forward without the financial strain. As Ramsey Solutions says:

“It’s best to sell your old home before buying a new one to avoid unnecessary risks and possible headaches.”

3. You’ll Be in a Stronger Position When You Make an Offer

Sellers love a clean, simple offer. If you’ve already sold your house, you don’t need to make your offer contingent on that sale – and that can help you stand out. Your agent can position your offer to be as strong as possible, so you have the best shot at getting the home you want.

This can be a big advantage in competitive markets where sellers prefer buyers with fewer strings attached.

One Thing To Keep in Mind

But, like with anything in life, there are tradeoffs. As you weigh your options, consider this potential drawback, too:

1. You May Need a Place To Stay (Temporarily)

Once your house sells, you may need a short-term rental or to stay with family until you can move into your next home. Your agent can help you negotiate things like a post-closing occupancy (renting the home from the buyer for a set period) or flexible closing dates to help smooth out that transition as much as possible.

Here’s a simple visual that can help you think through your options (see below):

But the best way to determine what’s best for you and your specific situation? Talk to a trusted local agent.

Bottom Line

In many cases, selling first doesn’t just give you clarity, it gives you options. It helps you buy with more confidence, more financial power, and less pressure.

If you’re ready to make a move but not sure where to begin, talk to a local agent. They’ll walk you through your equity, your timing, and your local market so you can decide what’s right for you.

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For Buyers

Should You Buy a Vacation Home?

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a screenshot of a cellphone

Some Highlights

  • Now that summer’s here, you may be planning your next getaway. But what if you didn’t have to? ​
  • Buying a vacation home means having a built-in escape you can use year after year. It gives you the chance to generate rental income and have a go-to retirement destination in the future.
  • If you’re dreaming of owning your own slice of paradise, connect with an agent to see if you can make it happen this summer.​

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Copyright © 2020-2025 Mark Sincavage. All rights reserved.  
The information contained, and the opinions expressed, in these article are not intended to be construed as investment advice. Let's Talk Real Estate, Mark Sincavage, and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Let's Talk Real Estate, Mark Sincavage and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.