2020 Economy and Main Line PA Real Estate Report answers all your questions about economy, politics, and the real estate marketplace. How does what’s happening in the economy have an impact on the real estate market. Obviously one would think that with all the craziness, somethings got to give right? Well, I completely understand your concern, it’s valid…it can be scary…some people may have to sell and they don’t have a choice because of a job transfer or loss. But some may just be wondering if they should hold on and see if the market goes up so that they can get a better return on their investment, or others may feel like they need to sell now so they can keep all the equity in case the market does go down. There are certain factors and variables that can cause housing markets to go down, and those factors also can have a positive or negative effect on the housing market as well.
Unemployment is one contributing factor and it was lower pre-pandemic and then spiked pretty high from April to July hovering between 8 and 14%, but it has been coming down month after month since April, which is a positive sign. Obviously, we are hoping it keeps coming down. Experts are projecting that it will continue to drop. There have been several recessions in the U.S. throughout history, but if you look historically at the times during recessions where the number of months that unemployment was greater than or equal to 9% the recession of 2020 is the lowest. It puts the unemployment perspective where we are right now, nowhere near what it was in the past. The Great Depression has 108 months, the Great Recession had 30 months, 1980’s Oil Recession had 19 months and in 2020 we’ve only had 4 months where the unemployment rate was greater than or equal to 9%. Also, the number of people in active forbearance is decreasing. It’s continued to go down since May. So more people are paying their mortgages as they are getting their jobs back. Many people are wondering what will happen due to the election?
I would recommend looking at a few factors, 1. Inventory, back in 2008 the levels of inventory were very high putting us into a buyers market, home prices were depreciating because there was so much supply, today inventory levels are very low, showing that it is a sellers market and prices are going up because buyers are paying more to secure and purchase new homes. Also, right now the percentage of equity that homeowners have is very strong. John Burns Consulting tells us that 42.1% of the homes owned in the Country are owned free and clear, they have no mortgage. And that 90% of homes have at least 10% equity which indicates that less homes will go into foreclosure due to the equity they have. So there is a lot of data that points to a positive forecast for the housing market in the future.
Feel free to reach out to us at no cost or risk for a hassle-free strategy session. I’m looking forward to hearing from you and as always Kimm Rolph sells the Main Line and local areas.