- Total income for country in late 2020 increased +4% y/y
- Consumer savings rate 2X higher than pre-pandemic savings rate
Potential for Great Spending Unleashing in 202
Lawrence Yun, chief economist and senior vice president of research with the National Association of REALTORS® (NAR), could not have been more upbeat about the economy in his 2021 predictions.
In his latest article for REALTOR Magazine, Yun believes that the 2021 economic situation in this country has the potential for “a great unleashing of spending…”
How Can This Be Possible in Midst of Massive Job Losses?
Yun puts several things on the plus side of the country’s economic ledger despite the labor market still missing 10M jobs. The country’s total income in late 2020 was +4% higher compared to a year ago. Translation? This is the first recession in which overall income has grown due to massive stimulus packages, wealth accumulation from record-high stock market and rising home prices. Additionally, many homeowners have already and continue to benefit from mortgage refinance proceeds.
Likewise, consumer spending has dropped -2% while consumer savings have risen to twice pre-pandemic levels.
Yun Encouraged with Ramped Production of New Construction
With inventory at record lows (down -16.4% in November and down -23% in December) rendering only 1.9 month of supply, Yun is quite encouraged to see that homebuilders have been producing new homes at their highest level in 13 years.
Southern states are leading the way in new home construction due to more plentiful land and less restrictive building regulations.
Widespread Vaccine Distribution & Uptick in Jobs Are Keys to 2021 Being a Growth Year
The more people being vaccinated and the more people becoming employed are critical touch-points for Yun’s optimism. Perhaps fully vaccinated older homeowners will become more willing to list their homes. Such a single listing could become two sales…one for another younger family needing /buying that larger home and two for that older couple downsizing into their next purchase by using their now sizable home equity.
Or perhaps, older homeowners may want to buy an even larger home to accommodate their family “visitors” who may be working remotely while living with them.
However things progress, continued pent-up demand, higher savings rates, increasing jobs, widespread vaccinations and even more stimulus relief all help underline Yun’s optimism for 2021.
Thanks to REALTOR Magazine.
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