Is the Economic Recovery Already Underway?

Is the Economic Recovery Already Underway? | Simplifying The Market

The Wall Street Journal just released their latest monthly Survey of Economists. In an article on the findings, they reported:

“The U.S. economy will be in recovery by the third quarter of this year, economists said in a survey that also concluded the labor market will fare better than previously expected following the effects of the coronavirus pandemic.”

Clearly, the latest jobs report from the U.S. Bureau of Labor Statistics confirmed the labor market is outperforming expectations, as it revealed that 2.5 million jobs were added. Directly before the release, experts forecasted that we would lose over 8 million jobs.

A second revelation indicating the economy is already about to turn around was also somewhat unexpected. More than 9 out of 10 economists surveyed believe the recovery has already begun this quarter or will begin in the third quarter. Here are the results of the survey question asking when the recovery will begin:Is the Economic Recovery Already Underway? | Simplifying The MarketThe survey also asked what type of recovery the economists expect.

More than 8 out of 10 believe it will be a form of a ‘V’ recovery:

  • A true ‘V’ with a sharp drop and a sharp rebound
  • A ‘Nike Swoosh’ with a sharp drop and a more gradual recovery, coined after the company’s logo

Some experts, possibly concerned about a second wave of COVID-19, call for a ‘W’ recovery – a double dip recession.

Others call for a ‘U’ with a prolonged bottom.

A very small percentage project the dreaded ‘L’ recovery, which is no recovery at all for the foreseeable future (think of the Great Recession).

Here’s the breakdown:Is the Economic Recovery Already Underway? | Simplifying The Market

Bottom Line

Though we still have a long and difficult journey ahead, it appears the worst for both the economy and the unemployment situation may be in our rearview mirror.


Source: KMC

Three Reasons Homebuyers Are Ready to Purchase This Year

Three Reasons Homebuyers Are Ready to Purchase This Year | Simplifying The Market

A recent survey by Lending Tree tapped into behaviors of over 1,000 prospective buyers. The results indicated 53% of all homebuyers are more likely to buy a home in the next year, even amid the current health crisis. The survey further revealed why, naming several reasons buyers are more likely to move this year (see graph below):
Three Reasons Homebuyers Are Ready to Purchase This Year | Simplifying The MarketLet’s break down why these are a few of the key factors motivating buyers to actively engage in the home search process, and the corresponding wins for sellers as well.

1. Low Mortgage Rates

The biggest reason potential homebuyers indicated they’re eager to purchase this year is due to current mortgage rates, which are hovering near all-time lows. Today’s low rates are making it more affordable than ever to buy a home, which is a huge incentive for purchasers. In fact, 67% of respondents in the Lending Tree survey want to take advantage of low mortgage rates. This is no surprise when comparing historic mortgage rates by decade (see below):Three Reasons Homebuyers Are Ready to Purchase This Year | Simplifying The MarketSam Khater, Chief Economist at Freddie Mac recently said:

“As the economy is slowly rebounding, all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market. Low mortgage rates are a key factor in this recovery.”

2. Reduced Spending

Some people have also been able to save a little extra money over the past few months while sheltering in place. One of the upsides of staying home recently is that many have been able to work remotely and minimize extra spending on things like commuting expenses, social events, and more. For those who fall into this category, they may have a bit more saved up for down payments and closing costs, making purchasing a home more feasible today.

3. Re-Evaluating Their Space

Spending time at home has also given buyers a chance to really evaluate their living space, whether renting or as a current homeowner. With time available to craft a wish list of what they really need in their next home, from more square footage to a more spacious neighborhood, they’re ready to make it happen.

What does this mean for buyers and sellers?

With these three factors in play, the demand for housing will keep growing this year, especially over the summer as more communities continue their phased approach to reopening. Buyers can take advantage of additional savings and low mortgage rates. And if you’re thinking of selling, know that your home may be in high demand as buyer interest grows and the number of homes for sale continues to dwindle. This may be your moment to list your house and make a move into a new space as well.

Bottom Line

If you’re ready to buy or sell – or maybe both – let’s connect to put your plans in motion. With low mortgage rates leading the way, it’s a great time to take advantage of your position in today’s market.


Source: KMC

Real Estate Tops Best Investment Poll for 7th Year Running

Every year, Gallup conducts a survey of Americans to determine their choice for the best long-term investment. Respondents are asked to select real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

For the seventh year in a row, real estate has come out on top as the best long-term investment. Gallup explained:

“Real estate remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.”

This year’s results indicated 35% of Americans chose real estate, followed by stocks at 21%. The full results covering the last decade are shown in the chart below:Real Estate Tops Best Investment Poll for 7th Year Running | Simplifying The Market

Bottom Line

The belief of the American people in the stability of housing as a long-term investment remains strong, even through the many challenges our economy faces today.


Source: KMC

Are You Ready for the Summer Housing Market?

Are You Ready for the Summer Housing Market? | Simplifying The Market

As the health crisis started making its way throughout our country earlier this spring, sellers have been cautious about putting their homes on the market. This hesitation stemmed primarily from fear of the spread of the coronavirus, and understandably so. This abundant caution has greatly impacted the number of homes for sale and slowed the pace of a typically busy spring real estate season. Mark Fleming, Chief Economist at First American notes:

“As more homeowners are reluctant to list their homes for sale amid the pandemic, the supply of homes available to potential home buyers continues to dwindle.”

With many states beginning a phased approach to reopening, virtual best practices and health and safety guidelines for the industry are in place to increase the comfort level of buyers and sellers. What we see today, though, is that sellers are still making a very calculated return to the market. In their latest Weekly Housing Trends Report, realtor.com indicates:

“New listings: On the slow path to recovery. Nationwide the size of declines held mostly steady this week, dropping 23 percent over last year, a slight increase over last week but still an improvement over the 30 percent declines in the first half of May.”

Although we’re starting to inch our way toward more homes for sale throughout the country, the number of homes on the market is still well below the demand from buyers. In the same report, Javier Vivas, Director of Economic Research for realtor.com shares:

“Sellers have yet to come back in full force, limiting the availability of homes for sale. Total active listings are declining from a year ago at a faster rate than observed in previous weeks, and this trend could worsen as buyers regain confidence and come back to the market before sellers.”

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) seems to agree:

“In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

What we can see today is that homebuyers are more confident than the sellers, and they’re ready to make up for lost time from the traditional spring market. Summer is gearing up to be the 2020 buying season, so including your house in the mix may be your best opportunity to sell yet. Interest in your house may be higher than you think with so few sellers on the market today. As Vivas says:

“More properties will have to enter the market in June to bring the number of options for buyers back to normal levels for this time of the year, nationwide and in all large markets.”

Bottom Line

If you’re ready to sell your house this summer, let’s connect today. Buyers are interested and they may be looking for a house just like yours.


Source: KMC

Is a Recession Here? Yes. Does that Mean a Housing Crash? No.

Is a Recession Here? Yes. Does that Mean a Housing Crash? No. | Simplifying The Market

On Monday, the National Bureau of Economic Research (NBER) announced that the U.S. economy is officially in a recession. This did not come as a surprise to many, as the Bureau defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

Everyone realizes that the pandemic shut down the country earlier this year, causing a “significant decline in economic activity.”

Though not surprising, headlines announcing the country is in a recession will cause consumers to remember the devastating impact the last recession had on the housing market just over a decade ago.

The real estate market, however, is in a totally different position than it was then. As Mark Fleming, Chief Economist at First American, explained:

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Four major differences in today’s real estate market are:

  1. Families have large sums of equity in their homes
  2. We have a shortage of housing inventory, not an overabundance
  3. Irresponsible lending no longer exists
  4. Home price appreciation is not out of control

We must also realize that a recession does not mean a housing crash will follow.  In three of the four previous recessions prior to 2008, home values increased. In the other one, home prices depreciated by only 1.9%.

Bottom Line

Yes, we are now officially in a recession. However, unlike 2008, this time the housing industry is in much better shape to weather the storm.


Source: KMC

16 Tips for Relocating to a New Town

Moving to a new town

 

Moving is always hard work but moving to a new town can be exceptionally hard, even when you are excited about your next chapter in life. As your real estate agent, I can refer you to an agent in your new town to help you find your new home, and also give you referrals for other services you will need, such recommendations for hotels, restaurants, child care, and pet boarding while you get settled.

To help make the logistics of your relocation as smooth as possible, here are some to-do items you may not have thought about yet.

  1. As soon as you know you will be moving, start to organize your belongings, getting rid of things you don’t want to take with you.
  2. Collect used packing materials like boxes and bubble wrap to reduce what you will need to purchase.
  3. Start packing items you don’t use daily, like family mementos, holiday decorations, books and décor accessories.
  4. Get an estimate from moving companies and schedule a tentative date with the one you choose.
  5. Visit your new town, if possible, and arrange a driving tour with a real estate agent that can show you different neighborhoods, shopping centers, and the locations of hospitals, schools, churches, and recreational facilities or parks.
  6. When you know what school district your children will enroll in, visit the schools your children will attend to meet the principal and tour the grounds.
  7. Once you know what neighborhood you will be living in, join Nextdoor or the neighborhood Facebook page to keep abreast of what’s happening there.
  8. Locate and pack your important papers and ID’s so that you know where they are at all times.
  9. If your company is offering you relocation services, make sure you know all the terms. Often, they will cover items you might not think about, like the cost of shipping your car or professional organizers to help you unpack. They may also be negotiable in what they cover.
  10. Save all your moving expense receipts. If you are moving 50 miles or more from your old job to start a new job, your expenses may be tax deductible.
  11. Make a list of services you need to terminate in your old town and services you need to initiate in your new town.
  12. If you have doctor, dentist, veterinary, or hair appointments scheduled ahead of time, call and cancel them.
  13. Remember to transfer subscriptions for things like magazines, food deliveries, and mail-order prescriptions.
  14. Change your delivery address on your Amazon, Target, Shipt, or other shopping accounts so you don’t accidentally ship items to your old address.
  15. Schedule an appointment to transfer your automobile registration and driver’s license if moving to a new state.
  16. Transfer your voter’s registration right away, especially if your move if close to a major election registration deadline.

Real Estate Will Lead the Economic Recovery

Real Estate Will Lead the Economic Recovery | Simplifying The Market

With more U.S. states reopening for business this summer, and as people start to return to work, we can expect the economy to begin improving. Most expert forecasts indicate this economic recovery will start to happen in the second half of this year. As we get back to work and the financial landscape of the country begins to turn around, many experts also agree that real estate has the potential to lead the way in the recovery process.

According to Ivy Zelman of Zelman & Associates:

 “Housing will fare better than expected during this severe downturn.”

In addition, CNBC notes:

“Mortgage demand from home buyers shows unexpectedly strong and quick recovery…The quick recovery has surprised most forecasters.”

Robert Dietz, Chief Economist and Senior Vice President for Economics and Housing Policy of the National Association of Home Builders (NAHB) says:

“Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery.”

One of the big reasons why housing has the potential to be such a driving force is the significant impact it has on the local economy. This impact is particularly strong when a newly constructed home is built and sold. According to a recent study by the National Association of Realtors (NAR), the average new home sale has a total economic impact of $88,416. As outlined in the graphic below, this is a combination of income generated from real estate industries, expenditures, and new home construction.Real Estate Will Lead the Economic Recovery | Simplifying The MarketWith so many unknowns today, especially in the wake of a worldwide pandemic, one known factor is the bright spark the housing market can play in local and national recovery. Buying and selling a home goes well beyond personal growth and satisfaction – it supports our economy as a whole.

Bottom Line

According to experts, the economy will begin to recover in the second half of this year. With real estate as a driver, that recovery may start sooner than we think.


Source: KMC

The Shocking News in the Unemployment Report

The Shocking News in the Unemployment Report | Simplifying The Market

Last Friday, the U.S. Bureau of Labor Statistics released their May Employment Situation Summary. Leading up to the release, most experts predicted the unemployment rate would jump up to approximately 20% from the 14.7% rate announced last month.

The experts were shocked.

The Wall Street Journal put it this way:

“The May U.S. jobless rate fell to 13.3% and employers added 2.5 million jobs, blowing Wall Street expectations out of the water: Economists had forecast a loss of 8.3 million jobs and a 19.5% unemployment rate.”

In addition, CNBC revealed:

“The May gain was by far the biggest one-month jobs surge in U.S. history since at least 1939.”

Here are some of the job gains by sector:

  • Food Service and Bartenders – 1,400,000
  • Construction – 464,000
  • Education and Health Services – 424,000
  • Retail – 368,000
  • Other Services – 272,000
  • Manufacturing – 225,000
  • Professional Services – 127,000

There’s still a long way to go before the economy fully recovers, as 21 million Americans remain unemployed. That number is down, however, from 23 million just last month. And, of the 21 million in the current report, 73% feel their layoff is temporary. This aligns with a recent Federal Reserve Bank report that showed employers felt 75% of the job losses are temporary layoffs and furloughs.

The Employment Situation Summary was definitely a pleasant surprise, and evidence that the country’s economic turnaround is underway. The data also offers a labor-market snapshot from mid-May, when the government conducted its monthly survey of households and businesses. Many states did not open for business until the second half of May. This bodes well for next month’s jobs report.

Bottom Line

We cannot rejoice over a report that reveals millions of American families are still without work. We can, however, feel relieved that we are headed in the right direction, and much more quickly than most anticipated.

Note: In its original report, the BLS explained that a misclassification error could have occurred over the last 3 months, starting in March of 2020. Readjusting for this error, the unemployment rate would actually show a drop from 19.7% in April to 16.3% in May. Nobody would say the original report of 13.3% unemployment was a good number, nor is the revised 16.3%. What is a positive move for our country and the economy is the significant drop in the rate from April to May, meaning more people are getting jobs than losing them. That’s the key takeaway.


Source: KMC

National Homeownership Month [INFOGRAPHIC]

National Homeownership Month [INFOGRAPHIC] | Simplifying The Market

National Homeownership Month [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • National Homeownership Month is a great time to reflect on how we can each promote stronger community growth.
  • Homeownership helps families build financial freedom, find greater happiness and satisfaction, and make a positive impact on our local communities.
  • Let’s connect today if homeownership is part of your future plans.


Source: KMC