Post: Housing Prices Will Be Fine After COVID-19, Right?
Posted by carl james juevesano on 5/02/20
This seems to be a question that no one truly has an answer
for, but I will do my best to give you several perspectives
over the coming weeks. Including, how record-high
unemployment, growing debt, concerns over a recovery, “how
long before our lives return to normal?” and “how it will
likely impact housing prices in 2020 and beyond?”.
sell my house lancaster
This week I will focus primarily on Unemployment, Stimulus
and a comparison of the Great Recession. How many of you
remember the hardships of the Great Recession? My wife and
I, both do and it was incredibly hard to find a job because
of all the economic uncertainty. If you live in the United
States, then you should know that our economy is based on
capitalism. Capitalism means that corporations are
privately owned and the operations are funded by profits.
How are these profits made, you may ask? Profits are made
when we the consumers spend money.
During the Great Recession, a lot of consumers had no money
to spend, which meant that businesses had no way of paying
employees. Employees were then laid off or had reduced
hours. It became a downward spiral as fewer people began to
spend hours continued to be reduced and businesses began to
layoff employees. Unemployment surged to the highest
numbers in years and peaked at 10%. The government had to
bail out homeowners, banks, and various businesses, just to
keep the economy afloat. The Economic stimulus package in
2008 ($152 billion) and the American Recovery and
Reinvestment Act in 2009 ($831 billion) total to a little
under $1 trillion.
Is this starting to feel like deja vu? It might or at least
it should, but keep in mind there has already been $2
trillion, injected into the economy for various businesses
and unemployment. That’s already more than double the Great
Recession. That number also doesn’t include the 2nd set of
small business loans approved last week because the first
wasn’t enough and it is very likely that money will be gone
just as fast as the first time. To make matters worse
unemployment is at a record high. According to BLS.gov
(bureau of labor statistics), there are over 30 million
people unemployed and that doesn’t count those who can’t
sign up because the systems aren’t able to process the high
volume of unemployed. There are roughly 165 million active
participants in the workforce, which means our unemployment
would currently be 18%. That means unemployment is at least
80% higher than it was during the Great Recession.
So what does this mean for you? Well, there are some key
differences between the Great Recession and now.
Overleveraged banks, insurance companies, and toxic real
estate assets in part to credit default swaps and bad
lending practices. The last downtown in 2008 was caused in
part because of real estate, which led to a steep decline
in housing prices over the following years (2012 was the
bottom). This downturn may not be due to real estate, but
that does not mean real estate won’t be impacted.
The worst impacts of the coronavirus may still be yet to
come. The United States now has over 1 million cases
recorded, more than the next 5 countries combined.
Scientists are also worried about a 2nd or possible 3rd
wave of the virus, which could coincide with the flu season
and make things worse. I have talked to several business
owners who are equally worried about a “slow bleed” when
the economy opens back up. Most stated that a change in
consumer habits could lead to less spending and that would
mean a reduction of staff or closing their business. Fewer
companies, less work, fewer jobs, and no money means there
will likely be fewer people looking for homes at the price
point you want. Keep in mind with real estate the prices
always go up faster than they come down. As I pointed out
earlier the peak of the recession was 2008-2009, but the
bottom of the real estate crash wasn’t until 2012. If you
are looking to sell my house Bakersfield CA or your
California home, now may be the time.
Need To Sell Your Los Angeles House Fast? Or Are You
Looking To Get More Information? Submit Your Basic Property
Info For A Fast Cash Offer Or Get Info On How We Can Help>>
Posts on this thread, including this one
- Housing Prices Will Be Fine After COVID-19, Right?, 5/02/20, by carl james juevesano.