06/24/2020
2nd Quarter Economic/Housing Market Trends.
America is roaring back with caution as the economy gradually bounces upwards. It’s not going to be the V-shape rebound as predicted by some forecasters, but it is a bounce anyway. And the Housing Market has remained steady, with surprising upticks in most categories:
1. May Unemployment rate dropped to 13.7% from 19.7% in April.
2. The hardest hit industries include Hospitality, Retail merchandising, Manufacturing & Transportation, etc.
3. Nearly 78% of Job losses were “temporary,” not “permanent.” Folks are gradually being called back to work.
4. Unemployment Rate is still expected to hover around 15%, well into the 3rd Quarter of 2020.
All Real Estate is local. In the State of Georgia, the Housing Industry did NOT experience a deep dip as predicted by pundits. It hasn’t been a Real Estate depression, knock on wood:
1. No mass foreclosures in the Housing market as anticipated.
2. Forbearance numbers are down significantly.
3. Almost 42.1% of Home Owners have at least 50% equity on their homes.
4. Mortgage Rates are extremely low, from upper 2 to lower 3 percentage points. Lowe Interest rates are a major attraction to buyers at this time.
5. Home purchase applications went up by 5.4% in May.
6. Mortgage applications went up by 9.3% in May.
7. First Time Home Buyer average is up 33%
8. Baby Boomers & Millennials are the market drivers in 2020 and beyond.
9. Home Values went up by 4.1% in the 2nd Quarter of 2020.
10. Home Inventory is low in almost every category, including new construction & resale. If nothing is added onto the market, Home inventory would be depleted next to zero in 91 days.
11. The average Days on the market for new listings is only 53 (DOM).
12. New Homes are up 33% in 2nd. Quarter.
13. New Listings in May went up 15.8%
14. The hottest category of homes on demand in May 2020 was between 200k & 500k.
Overall, it is still a Seller’s Market in Real Estate, due to low inventory. But, the luxury segment still shows signs of a Buyer’s market. There has been a significant jump in home values (3%-5%) during the 1st two Quarters of 2020. That is a very good indication that Real Estate continues to be the #1 choice for Long Term Investment Strategy.
Conclusion:
Low Inventory, coupled with strong demand, create an increase in Home values. New homes cannot be built fast enough to satisfy current demand. Cost of construction, loan availability during pandemic & regulatory environment are all impediments to new home construction, resulting in higher home prices. When new homes go up in price, existing home prices go up as well. The forces of supply & demand are constantly at work in the Real Estate Business, and continues to stand strong as a major economic indicator in Georgia and elsewhere in USA.
Sam Esale is Your Neighborhood Realtor @ Berkshire Hathaway HomeServices Georgia Properties: Tel:770-899-4504
Email: [email protected]
