“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.”

It’s logical to think there would be a direct correlation  between the unemployment rate and home sales as the unemployment rate went up, home sales would go down, and when the unemployment rate went down, home sales would go up.

However, research reviewing the last thirty years doesn’t show that direct relationship as noted in the graph above.

The blue and grey bars represent home sales, while the yellow line is the unemployment rate.  Look at the number 1 – 4.

1.  The unemployment rate was rising between 1992-1993, yet home sales INCREASED.
2.  The unemployment rate was rising between 2001-2003, and home sales INCREASED.
3. The unemployment rate was rising between 2007-2010, and home sales significantly DECREASED.
4. The unemployment rate was falling continuously between 2015-2019, and home sales remained  RELATIVELY FLAT.

THE IMPACT OF THE UNEMPLOYMENT RATE ON HOME SALES DOESN’T SEEM TO BE AS STRONG AS WE MAY HAVE THOUGHT!

This time is different.  There is no doubt the country hasn’t seen job losses this quickly in almost one hundred years, since the Great Depression.

Goldman Sachs projects the unemployment rate to be 15% in the third quarter of 2020, flattening to single digits by the fourth quarter of this year and then just over 6% by the fouerth quarter of 2021.  Not ideal for the housing industry, but manageable.

No doubt the housing market will have challenges this year.  However, with the help  being given to those who have lost their jobs and the fact that we’re looking at a quick recovery for the economy after we address the health problem, the housing industry should be fine in the long term.

We are your trusted real estate advisors – ready to help you with all your real estate concerns and questions –

STAY SAFE.