Key Highlights
- Currently, housing industry is star of economy with its V-shaped recovery
- Other economic factors and industries causing micro-recessions, micro-recoveries and staggered downturn
- Will housing boom last?
The housing industry is most definitely on a high these days. Sales are at a 13-year high. Home prices are up +7.2% from last year. For-sale home searches are up +30% y/y. Home improvement searches are up +50% y/y.
And, surprise, some agents/brokers are having their best results ever in a year of record-setting COVID-caused contract plunges, lost jobs and lost income nightmares, economic lockdowns and dislocations, and, of course, never-before-seen numbers of death and infection.
Such contradictions can be confusing. While real estate professionals concentrate on record demand for housing stock that is simply not there and sky’s-the-limit bidding wars, are we underestimating the financial and emotional vulnerabilities of the still 11.1M people in this country who do not have work? Are we kidding ourselves when we congratulate ourselves for having an unemployment rate of only 6.9% instead of the +14% rate we had in April? Are we not paying attention to the one of every 12 mortgages in this country that is past due? Are we turning our eyes and thoughts away from the renters and homeowners currently with jobs who could not pay more than one mortgage payment or one month’s rent if they suddenly lost their job? And are we blind to the some 3.4M mortgage borrowers currently in forbearance who may/may not be able to continue/afford the costs of homeownership?
True, workers who can work remotely are still working and may be your clients as they relocate from dense metros to smaller areas and simultaneously more spacious houses. True, interest rates are and will remain near zero now and until, likely, 2023. True, the disparities between the haves and the have-nots is more pronounced today than it was last year.
With those who can work remotely and those who can afford to move, are we seeing the same kind of housing boom cycle we saw during 2007? Will we see the same kind of housing bust and flurry of foreclosures we saw in 2008 as society and work continue to reorganize?
For whatever happens, as the song says, “The Times They Are A’Changin’.” Pay attention, be prepared and have your eyes and mind open.
Thanks to Andrew Duguay, chief economist at Prevedere, an industry insights and predictive analytics company, writing for InmanNews.
