The COVID-19 pandemic has all but shut down the American economy, sending it into a state of potential recession. No one can predict when these dark times will end, but there is certainly a ray of hope. The market size of the US brokerage and real estate sales has been growing at a rate of 2.8% annually, on average, between 2015 and 2020, according to a report released by IBISWorld. And now, buyer behavior indicates that once the shelter-in-place restriction is lifted, the housing industry’s health is likely to improve.
In March 2020, the real estate demand saw a decline of 34%, which ticked down to only 15% for the 7 days to April 26. However, we cannot confirm with certainty that the industry is climbing out of the hole yet. At the same time, there are some signs that the market is moving towards recovery. Here’s a look.
End of Home Isolation
The April job report by the US Labor Department shows that 20.5 million jobs were lost and unemployment rose to a staggering 14.7%. Over 32% of the workforce has lost their income since the pandemic started and 26% are working with a pay-cut, as of May 5, 2020, according to data released by Marketplace. However, reports say that it is only a temporary layoff and they are most likely to get back their jobs once the pandemic is over. This is a subtle indicator that the economy could be back on track later this year. Once the lockdown protocols are removed, the housing industry will be rebuilt, slowly yet steadily.
This is one of the strongest indicators that the economy will bounce back. As of June 2, 2020, there have been 6.4 million cases of COVID-19 across the globe. And, about 18,000 new cases were reported in the US on June 1, 2020. However, testing capacity is parallelly being increased, with stay-at-home orders being strictly monitored. The states that had issued lockdown orders first are already noticing lower new cases. As the country starts to see a decline in new cases and the curve begins to flatten, the economy is expected to start recovering.
Hard Hit Sectors
Most sectors of the economy have faced a severe blow due to the outbreak. But the travel, transportation, food and retail industries have suffered the most. While white collar jobs have the privilege of continuing from home, employees of particular sectors have to simply let go of their work. However, all eyes are on these markets, since they are expected to be the first to get back on track once the coronavirus is contained. As more people start stepping out of their homes and America fights off the virus, these industries can start to come out of this downward spiral too. In all, this can lead to the housing industry seeing a speedy recovery, backed by the government disaster relief fund of $6 trillion.
Decline in Jobless Claims
Over 33 million Americans have filed unemployment benefit claims since the layoffs began. But, the good news is that by May 2, 2020, the number of jobless claims had declined by 677,000, the 5th consecutive decline since the beginning of the pandemic. Although the numbers are still historically high, it is a sign that the financial stress is decreasing bit by bit. In fact, when the claims begin to decline further, the odds are that people will once again look at aspirational purchases, such as a home.
Researchers are also keeping track of web traffic for new home listings and new mortgage applications. These are sure shot ways to ascertain that Americans are already prepared to make purchases in the near future. Till then, looking at past outbreaks, COVID-19 should be contained in another few months, leading to an economic rebound either later this year or in 2021. So, use this time to either make improvements to improve your home’s value or do your research to make an informed purchase.