{"id":654,"date":"2020-04-06T15:49:04","date_gmt":"2020-04-06T15:49:04","guid":{"rendered":"http:\/\/phphouses.com\/blog\/?p=654"},"modified":"2021-02-03T16:34:16","modified_gmt":"2021-02-03T16:34:16","slug":"will-surging-unemployment-crush-home-sales","status":"publish","type":"post","link":"https:\/\/phphouses.com\/blog\/will-surging-unemployment-crush-home-sales\/","title":{"rendered":"Will Surging Unemployment Crush Home Sales?"},"content":{"rendered":"
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Will Surging Unemployment Crush Home Sales?<\/p><\/div>\n

Ten million Americans lost their jobs over the last two weeks. The next announced unemployment rate on May 8th<\/sup>\u00a0is 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,\u00a0President<\/em>\u00a0of the\u00a0Federal Reserve Bank of St. Louis<\/em>, 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\u00a0recent interview<\/a>\u00a0he said:<\/p>\n

\u201cThis 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.\u201d<\/em><\/p><\/blockquote>\n

That\u2019s promising, but we\u2019re still uncertain as to when the recently unemployed will be able to return to work.<\/p>\n

Another concern: how badly will the U.S. economy be damaged if people can\u2019t buy homes?<\/strong><\/h4>\n

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.<\/p>\n

Chris Herbert,\u00a0Managing Director<\/em>\u00a0of the\u00a0Joint Center for Housing Studies<\/em>\u00a0of Harvard University, in a post titled\u00a0Responding to the Covid-19 Pandemic<\/a>, addressed the toll this crisis will have on our nation, explaining:<\/p>\n

\u201cHousing is a foundational element of every person\u2019s 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.\u201d<\/em><\/p><\/blockquote>\n

How has the unemployment rate affected home sales in the past?<\/strong><\/h4>\n

It\u2019s 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.<\/p>\n

However, research reviewing the last thirty years doesn\u2019t 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:<\/p>\n

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Unemployment Rates and Home Sales<\/p><\/div>\n

    \n
  1. The unemployment rate was rising between 1992-1993, yet home sales\u00a0increased<\/strong>.<\/li>\n
  2. The unemployment rate was rising between 2001-2003, and home sales\u00a0increased<\/strong>.<\/li>\n
  3. The unemployment rate was rising between 2007-2010, and home sales significantly\u00a0decreased<\/strong>.<\/li>\n
  4. The unemployment rate was falling continuously between 2015-2019, and home sales\u00a0remained relatively flat<\/strong>.<\/li>\n<\/ol>\n

    The impact of the unemployment rate on home sales doesn\u2019t seem to be as strong as we may have thought.<\/p>\n

    Isn\u2019t this time different?<\/strong><\/h4>\n

    Yes. There is no doubt the country hasn\u2019t seen job losses this quickly in almost one hundred years. How bad could it get?\u00a0Goldman Sachs<\/em>\u00a0projects 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.<\/p>\n

    How does this compare to the other financial crises?<\/strong><\/h4>\n

    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:<\/p>\n

    \"\"

    Unemployment Rates Compared to Past Financial Rates<\/p><\/div>\n

    Bottom Line<\/strong><\/h3>\n

    We\u2019ve 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\u2019re 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.<\/p>\n

    Contact us:<\/strong>
    \nPHP Houses
    \n142 W Lakeview Ave
    \nUnit 1030
    \nLake Mary, FL 32746
    \nPh:\u00a0(407) 519-0719<\/span>
    \nFax:\u00a0(407) 205-1951<\/span>
    \nemail:\u00a0info@phphouses.com<\/p>\n

    Let\u2019s Connect:<\/strong>
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    THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

    Ten million Americans lost their jobs over the last two weeks. The next announced unemployment rate on May 8th\u00a0is 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,\u00a0President\u00a0of the\u00a0Federal Reserve Bank of St. Louis, explained that the… Finish Reading Will Surging Unemployment Crush Home Sales?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[69],"tags":[132,10,18,16,27,155,52,42,63,20,48,108,13,47,19,154,17],"_links":{"self":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/654"}],"collection":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/comments?post=654"}],"version-history":[{"count":1,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/654\/revisions"}],"predecessor-version":[{"id":658,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/654\/revisions\/658"}],"wp:attachment":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/media?parent=654"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/categories?post=654"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/tags?post=654"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}