U.S. Housing Market Outlook and Indicators for Real Estate Investment

The housing market amid the coronavirus pandemic, the most renowned economists could not clearly indicate the future of our recovery. We were given all different shapes of economic recovery signals ranging from V-shaped, U-shaped, W-shaped, to potentially L-shaped. The most important indicators for the U.S. housing market to help guide your real estate investing:

• Employment

The unemployment rate went from a 50-year low at 3.5% in Feb 2020 to an all-time high of 14.7% in April 2020. By June, the jobless rate had dropped to 11.1%. As significant as it may seem, over 75% of the job losses are temporary layoffs and furloughs. In California, FED-ED Extension provides up to 20 weeks of additional unemployment benefits through the Pandemic Unemployment Assistance Program which total up to 46 weeks of unemployment benefits. Many small business owners have reported difficulties in hiring back their employees due to additional CARES-ACT stimulus funds which provide $600 per week in addition to the state’s unemployment benefits. However, this additional federal CARES act unemployment benefit is scheduled to end on July 31.

• Stock Market

The stock market faced one of the most turbulent and unexpected fluctuations during the COVID-19 pandemic. S&P had plunged 35% from the peak and jumped over 20% for the second quarter. Although S&P is still lower than December 2019 value, NASDAQ reached an all-time high in the midst of the coronavirus pandemic.

• Mortgage Rates

The 30-year mortgage rates have dropped as low as 2.75% for conventional loans and 2.375% for VA loans. As a result, homebuyer mortgage demand increased by 33% in the month of July compared to 2019. Freddie Mac, Fannie Mae, and Mortgage Bankers Association have predicted the mortgage rates will remain low until the second quarter of 2021. The Federal Reserve had also pledged to keep the federal fund rates close to zero until 2022 or until certain conditions are met.

Topics: COVID-19, Economy, Real Estate Recovery

Work cited: Forbes, July 24, 2020

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