Unemployment Report: No Need to Be Terrified

Unemployment Report: No Need to Be Terrified | MyKCM

Last Friday, the Bureau of Labor Statistics (BLS) released its latest jobs report. It revealed that the economic shutdown made necessary by COVID-19 caused the unemployment rate to jump to 14.7%. Many anticipate that next month the percentage could be even higher. These numbers represent the extreme hardship so many families are experiencing right now. That pain should not be understated.

However, the long-term toll the pandemic will cause should not be overstated either. There have been numerous headlines claiming the current disruption in the economy is akin to the Great Depression, and many of those articles are calling for total Armageddon. Some experts are stepping up to refute those claims.

In a Wall Street Journal (WSJ) article this past weekend, Josh Zumbrun, a national economics correspondent for the Journal explained:

“News stories often describe the coronavirus-induced global economic downturn as the worst since the Great Depression…the comparison does more to terrify than clarify.”

Zumbrun goes on to explain:

“From 1929 to 1933, the economy shrank for 43 consecutive months, according to contemporaneous estimates. Unemployment climbed to nearly 25% before slowly beginning its descent, but it remained above 10% for an entire decade…This time, many economists believe a rebound could begin this year or early next year.”

Here is a graph comparing current unemployment numbers (actual and projected) to those during the Great Depression:Unemployment Report: No Need to Be Terrified | MyKCM Clearly, the two unemployment situations do not compare.

What makes this time so different?

This was not a structural collapse of the economy, but instead a planned shutdown to help mitigate the virus. Once the virus is contained, the economy will immediately begin to recover. This is nothing like what happened in the 1930s. In the same WSJ article mentioned above, former Federal Reserve Chairman Ben Bernanke, who has done extensive research on the depression in the 1930s, explained:

“The breakdown of the financial system was a major reason for both the Great Depression and the 2007-09 recession.” He went on to say that today – “the banks are stronger and much better capitalized.”

What about the families and small businesses that are suffering right now?

The nation’s collective heart goes out to all. The BLS report, however, showed that ninety percent of the job losses are temporary. In addition, many are getting help surviving this pause in their employment status. During the Great Depression, there were no government-sponsored unemployment insurance or large government subsidies as there are this time.

Today, many families are receiving unemployment benefits and an additional $600 a week. The stimulus package is helping many companies weather the storm. Is there still pain? Of course. The assistance, however, is providing much relief until most can go back to work.

Bottom Line

We should look at the current situation for what it is – a predetermined pause placed on the economy. The country will recover once the pandemic ends. Comparisons to any other downturn make little sense. Bernanke put it best:

“I don’t find comparing the current downturn with the Great Depression to be very helpful. The expected duration is much less, and the causes are very different.”

Posted on May 13, 2020 at 9:28 am
Desiree Stanley | Category: Real Estate, Unemployment | Tagged , , , , , , , , , , , , ,

Unemployment: Hope on the Horizon

Unemployment: Hope on the Horizon | MyKCM

Today, the unemployment rate for April 2020 will be released by the U.S. Bureau of Labor Statistics. It will hit a peak this country has never seen before, with data representing real families and lives affected by this economic slowdown. The numbers will alarm us. There will be headlines and doomsday scenarios in the media. There is hope, though, that as businesses reopen, most people will become employed again soon.

Last month’s report indicated we initially lost over 700,000 jobs in this country, and the unemployment rate quickly rose to 4.4%. With the release of the new data, that number will climb even higher. Experts forecast this report will show somewhere between a 15% – 20% national unemployment rate, and some anticipate that number to be even greater (see graph below):Unemployment: Hope on the Horizon | MyKCM

What’s happened over the last several weeks? 

Here’s a breakdown of this spring’s weekly unemployment filings:Unemployment: Hope on the Horizon | MyKCM The good news shown here indicates the number of additional unemployment claims has decreased week over week since the beginning of April. Carlos Rodriguez, CEO of Automatic Data Processing (ADP) says based on what he’s seeing:

“It’s possible that companies are already anticipating some kind of normalization, opening in certain states and starting to post jobs.” 

He goes on to say that this doesn’t mean all companies are hiring, but it could mean they are at the point where they’re not cutting jobs anymore. Let’s hope this trend continues.

What will the future bring?

Most experts predict that while unemployment is high right now, it won’t be that way for long. The length of unemployment during this crisis is projected to be significantly shorter than the duration seen in the Great Recession and the Great Depression.Unemployment: Hope on the Horizon | MyKCM While forecasts may be high, the numbers are trending down and the length of time isn’t expected to last forever.

Bottom Line

Don’t let the headlines rattle you. There’s hope coming as we start to safely reopen businesses throughout the country. Unemployment affects our families, our businesses, and our country. Our job is to rally around those impacted and do our part to support them through this time.

Posted on May 8, 2020 at 9:14 am
Desiree Stanley | Category: Unemployment | Tagged , , , ,

The Housing Market Is Positioned to Help the Economy Recover [INFOGRAPHIC]

The Housing Market Is Positioned to Help the Economy Recover [INFOGRAPHIC] | MyKCM

Some Highlights

  • Expert insights are painting a bright future for housing when the economy bounces back – and it will.
  • We may be facing challenging economic times today, but the housing market is poised to help the economy recover, not drag it down.
  • Let’s connect to make sure you’re informed and ready when it’s time to make your move.
Posted on April 7, 2020 at 1:11 pm
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , ,

A Recession Does Not Equal a Housing Crisis [INFOGRAPHIC]

A Recession Does Not Equal a Housing Crisis | MyKCM

Some Highlights

  • The COVID-19 pandemic is causing an economic slowdown.
  • The good news is, home values actually increased in 3 of the last 5 U.S. recessions and decreased by less than 2% in the 4th.
  • All things considered, an economic slowdown does not equal a housing crisis, and this will not be a repeat of 2008.
Posted on March 25, 2020 at 1:04 pm
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , ,

Should I wait???

With everything that is happening in the US and around the world related to COVID-19, many people are wondering, “Should I wait?”… should I wait to sell my home, should I wait to buy a home? There are still many people listing homes for sale and buyers still looking for those homes. Yes, we’ve had to stop all home tours but we’re creative people and there are great resources out there to help like 3D video tours, photos, FaceTime, Zoom meetings, Docusign, eRecording for the county and all sorts of workarounds.

Many people fear the stock market volatility from the pandemic is going to cause another recession. Whether or not that happens, it’s important to remember one very important thing:
A recession does not equal a housing crisis or “crash” as we saw in 2008.

A recession doesn’t even mean that home prices will depreciate. If you look at the graph, you’ll see that in the five most recent recessions, only two of them saw values decline.

9/11 has a lot in common with what is happening today.
People are avoiding crowds and the same part of the economy is under pressure, restaurants, airlines, hotels, bars, and so on.

If you take a look at the related graph, you see that during the DOT com scare and after the 9/11 terrorism attacks, the stock market showed volatility like we’re seeing today. However, the housing market wasn’t affected, and home prices actually appreciated.

A great analogy was presented to me, 2008 was like a tornado that ripped through and shredded everything and we had to rebuild. All the systems we counted on in banking, mortgage, lending were demolished and it effected everyone. The COVID-19 is more like a giant snowstorm that has hit and we’re all stuck inside. But eventually, it will clear and we will be able to get back out to go about our regular lives… to work, to travel, to our favorite restaurant or bar, movies or theater, and our kids will go back to school. While we may not know what the future holds if you are pausing on buying OR selling a home because you think a recession will cause another housing crisis… they’re not the same thing, and you could be missing out on today’s record-low mortgage rates. Which are still HISTORICALLY low.

Are you thinking about selling your home to move into the right size home for your family? Or ready to downsize to fit your current needs? Do you have questions about selling your home in this market? Give me a call today at 408-465-9290 or DM me to go over your real estate goals.

Posted on March 23, 2020 at 1:04 pm
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , ,

The 2020 Real Estate Projections That May Surprise You

The 2020 Real Estate Projections That May Surprise You | MyKCM

This will be an interesting year for residential real estate. With a presidential election taking place this fall and talk of a possible recession occurring before the end of the year, predicting what will happen in the 2020 U.S. housing market can be challenging. As a result, taking a look at the combined projections from the most trusted entities in the industry when it comes to mortgage rateshome sales, and home prices is incredibly valuable – and they may surprise you.

Mortgage Rates

Projections from the experts at the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac all forecast mortgage rates remaining stable throughout 2020:The 2020 Real Estate Projections That May Surprise You | MyKCMSince rates have remained under 5% for the last decade, we may not fully realize the opportunity we have right now.

Here are the average mortgage interest rates over the last several decades:

  • 1970s: 8.86%
  • 1980s: 12.70%
  • 1990s: 8.12%
  • 2000s: 6.29%

Home Sales

Three of the four expert groups noted above also predict an increase in home sales in 2020, and the fourth sees the transaction number remaining stable:The 2020 Real Estate Projections That May Surprise You | MyKCMWith mortgage rates remaining near all-time lows, demand should not be a challenge. The lack of available inventory, however, may moderate the increase in sales.

Home Prices

Below are the projections from six different expert entities that look closely at home values: CoreLogicFannie Mae, Ivy Zelman’s “Z Report”, the National Association of Realtors (NAR), Freddie Mac, and the Mortgage Bankers Association (MBA).The 2020 Real Estate Projections That May Surprise You | MyKCM Each group has home values continuing to improve through 2020, with four of them seeing price appreciation increasing at a greater pace than it did in 2019.

Is a Recession Possible?

In early 2019, a large percentage of economists began predicting a recession may occur in 2020. In addition, a recent survey of potential home purchasers showed that over 50% agreed it would occur this year. The economy, however, remained strong in the fourth quarter, and that has caused many to rethink the possibility.

For example, Goldman Sachs, in their 2020 U.S. Outlook, explained:

“Markets sounded the recession alarm this year, and the average forecaster now sees a 33% chance of recession over the next year. In contrast, our new recession model suggests just a 20% probability. Despite the record age of the expansion, the usual late-cycle problems—inflationary overheating and financial imbalances—do not look threatening.”

Bottom Line

Mortgage rates are projected to remain under 4%, causing sales to increase in 2020. With growing demand and a limited supply of inventory, prices will continue to appreciate, while the threat of an impending recession seems to be softening. It looks like 2020 may be a solid year for the real estate market.

Are you still in the market for a home? Give me a call at 408-465-9290 or message me to go over your real estate goals. Buying a home takes time, let’s start now to get you into your home!

Posted on January 3, 2020 at 1:35 pm
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , , , , , , , , , , ,