As the pandemic continues, jobs, interest rates, inflation, and materials costs all in the mix
While no one has a crystal ball, Realtor.com’s Senior Economist George Ratiu recently talked about changes in the economy as it applies to the real estate markets, starting with jobless claims. He also mentions how the mortgage rate decline boosted sales of existing homes and may even increase the number of homes for sale this summer, with information based on Realtor.com’s inventory release.
“The recovery continues in fits and starts,” he says. He goes on to say how the Bureau of Labor Statistics reported that the pandemic-caused recession, in reality, lasted only two months — the shortest on record. But even now, a year afterward, we are still dealing with the aftermath. This past week’s jobless claims rose unexpectedly to 400,000+. Evidently, the mismatch of skills, geography, and compensation keeps job openings unfilled, while workers take opportunities to dabble in new fields.
As for the real estate market, sometimes a drop in rates is indicative of low investor confidence in what is happening around the world — like the burgeoning of the pandemic’s Delta variant— just when things seemed to be on the upswing. The Federal Reserve’s lukewarm approach to inflation also isn’t helping. But all this is still good news for home buyers, helping to overcome four months of declines in existing homes, especially in the Midwest and Northeast. Median home prices reached a record high, causing more homeowners to consider selling their homes.
“This year’s fall season is likely to be busier than usual as seasonal patterns shift in the pandemic’s wake,” says Ratiu. Homebuilders, however, have not seen enough of an improvement in materials costs trickle down to them in order to restore confidence. Permits and completions declined, while starts increased from the prior month.
In the meantime, Ratiu cites the impending report of the Emerging Markets Index in collaboration with The Wall Street Journal, which is expected to show how smaller markets now dominate the list. They are characterized by strong economies, entrepreneurial diversity, good quality of life, and a growing share of non-local home shoppers, many of whom can now take their “hybrid” work anywhere. Locations include Billings, MT, Coeur d’Alene, ID, Fort Wayne, IN, Rapid City SD, and Raleigh, NC.