What Might the Rest of 2020 Look Like?

What Are Experts Saying About the Rest of 2020? | MyKCM

Let’s be real one of the major items on everyone’s mind these days is: What’s going to happen to the housing market in the second half of the year? If we look at recent data on the economy, unemployment, real estate, and more, many factors economists are now revising their forecasts for the remainder of 2020 – and the outlook is extremely encouraging. Here’s  what some experts have to say about key areas that will power the industry and the economy forward this year.

Mortgage Purchase Originations: Joel Kan, Associate Vice President of Economic and Industry ForecastingMortgage Bankers Association

“The recovery in housing is happening faster than expected. We anticipated a drop off in Q3. But, we don’t think that’s the case anymore. We revised our Q3 numbers higher. Before, we predicted a 2 percent decline in purchase originations in 2020, now we think there will be 2 percent growth this year.”

Home Sales: Lawrence Yun, Chief Economist, National Association of Realtors

“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lock down and hence the cyclical low point…Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

Inventory: George Ratiu, Senior Economist, realtor.com

“We can project that the next few months will see a slow-yet-steady improvement in new inventory…we projected a stepped improvement for the May through August months, followed by a return to historical trend for the September through December time frame.”

Mortgage Rates: Freddie Mac

“Going forward, we forecast the 30-year fixed-rate mortgage to remain low, falling to a yearly average of 3.4% in 2020 and 3.2% in 2021.”

New Construction: Doug Duncan, Chief Economist, Fannie Mae

“The weaker-than-expected single-family starts number may be a matter of timing, as single-family permits jumped by a stronger 11.9 percent. In addition, the number of authorized single-family units not yet started rose 5.4 percent to the second-highest level since 2008. This suggests that a significant acceleration in new construction will likely occur.”

Good news is that the experts are optimistic about the second half of the year. If you made the choice to pause your 2020 real estate plans in the spring, now may be the right time for you to get back into the market.  If you have questions I’m here to talk to you about it, no pressure, no tactics just the advice and guidance you need to make the best decision possible for your family.

Unemployment….3 Things to Understand

Three Things to Understand About Unemployment Statistics | MyKCM

Brace yourselves, tomorrow morning the Bureau of Labor Statistics will release the latest Employment Situation Summary, which includes the most current unemployment rate. Be prepared for a horrific number. Many analysts believe unemployment could be greater than 20%. The numbers represent families all across the United States who are not sure when (or if) they will return to work. The emotional impact on these families is devastating.

However there are some small rays of light shining on this issue. Here are three:

1. The actual number of unemployed is less than many are reporting

The number of people unemployed is sometimes over-exaggerated. It seems that every newscaster talks about the 40+ million people “currently” unemployed. It is true that, over the last ten weeks, over 40.7 million people have applied for unemployment. It is also true, however, that many of those people have already returned to work or gotten a new job. The actual number of people currently unemployed is 21.1 million. While this is still a horrible number, it is about half of what is often being reported.Three Things to Understand About Unemployment Statistics | MyKCM

2. Of those still unemployed, most are temporary layoffs

Last month’s unemployment report indicates that 90% of those unemployed believe their status is temporary. Friday’s report will probably show a decline in that percentage as the original number was somewhat optimistic. However, a recent survey by the Federal Reserve Bank showed that employers believe over 75% of job losses are temporary layoffs and furloughs. This means 3 out of 4 people should be returning to work as the economy continues to recover.

3. Those on unemployment are receiving assistance

According to a recent study from the Becker Friedman Institute for Economics at the University of Chicago, 68% of those who are eligible for unemployment insurance receive benefits that exceed lost earnings, with 20% receiving benefits at least twice as large as their lost earnings. So yes, tomorrow’s report will be difficult to swallow. However, as our nation continues to reopen, many of the families who are impacted will be able to return to work.

Is there Hope on the Horizon for Unemployment?

the-new-york-public-library-9ZpOvzm9vJc-unsplashWell, the markets are once again waiting for tomorrows unemployment rate for April 2020 that will be released by the U.S. Bureau of Labor Statistics. It will hit a peak this country has never seen before (which can be scary given we keep hearing people talk about unemployment rates that rival the Great Depression), with data representing real families and lives affected by this economic slowdown. The numbers are going to be alarming to us. The media headlines will present a doomsday scenario.  However, there is hope that as businesses reopen, most people will become employed again soon.

Last month’s report indicated we initially lost over 700,000 jobs 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

So, what’s happened over the last several weeks? 

Here’s a breakdown of what this spring’s weekly unemployment filings have looked like:Unemployment: Hope on the Horizon | MyKCMThe good news shown in the above graph 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.

Everyone wants to know what will the future bring?

Many experts predict that while our 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 | MyKCMSo, while forecasts may be high, the numbers are trending down and the length of time isn’t expected to last forever.

I know it isn’t easy, however don’t let the headlines rattle you.  There is light at the end of the tunnel as we begin to safely reopen businesses throughout the country.  The truth is unemployment affects our families, our businesses and our country, however it is important to rally around those impacted and do our part to support them through this tough time.