With schools, non-essential stores, gyms, entertainment, and other businesses and services closing down, along with the ordered social distancing and stay at home order – anxiety is understandably in the air and there is no question that we are facing a time of confusion.
However, if we consider historical trends and research, analyze facts and data, we can confidently evaluate the situation and foresee that this is neither a repeat of the Great Depression, nor the 2008 Housing Crisis and Recession.
The fact is, unlike the past crises, Americans are better prepared to weather the financial storm.
For instance, let’s look at the unemployment rate. Common sense would tell us that there is a direct correlation between the unemployment rate and home sales – as the unemployment rate increases, home sales decrease. Conversely, as the unemployment rate decreases, home sales increase.
However, if you look at the research, this isn’t the case. For example, whereas the unemployment rate increased between 1992 and 1993, home sales actually increased as well. Similarly, when the unemployment rate increased been 2001 and 2003, home sales again increased. A few years later, between 2007 and 2010, when the unemployment rate increased, home sales decreased and between 2015 and 2019, when the unemployment rate decreased, home sales remained consistently strong.
Furthermore, home values have actually increased in three of the last five U.S. recessions and decreased by less than two percent in the fourth.
Accordingly, a rise in unemployment does not necessarily correlate with real estate, as real estate is a critical element of every person’s life. Individuals get married, have children, become empty nesters, change jobs, retire, invest in new channels, and pick up new projects (i.e. fixer uppers). Whether it’s personal, a chapter of the life cycle, financial, or for another reason, buying and selling real estate is part of America’s built.
As Chris Herbert, the Managing Director of the Joint Center for Housing Studies of Harvard University, explains: “Housing is a foundational element of every person’s well-being. And with nearly a fifth of US gross domestic product rooted in housing-related expenditures, it is also critical to the well-being of our broader economy.”
Therefore, although it may be easy to fear the headlines and stress over this year’s challenges, know that we will recover quickly. Over the long run, the housing industry will be fine and come out strong.
Moreover, I want to leave you with a great quote I came across: “I think that when the dust settles, we will realize how little we need, how very much we actually have, and the true value of human connection.”
Although social distancing and the stay at home order is not easy, it does shed a new appreciation for and light to slowing down, acknowledge what is truly of value, and understand your priorities. It also offers a great opportunity to tackle your unfinished or un-started projects, whether they’re home projects, entrepreneurial projects, self-care projects, or anything else for that matter.
And most importantly, this is a great time to take note of all the special people in your life and take those extra measures to remind them of their importance and value (i.e. making that phone call, video call, or even driving by and saying hi from the edge of the driveway). Furthermore, as we help one another pick-up groceries, make masks, and stay home to help flatten the curve, it’s beautiful to see how we are all in this together, helping one another.
Stay safe and if you have any questions or concerns, please do not hesitate to message me.
As always, if you need any help listing or buying a home, please don’t hesitate to reach out.
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