Currently, sellers are in control of the housing market, with record high prices and a low inventory that is trending lower. While unemployment rose to new heights during the COVID-19 pandemic, recently there has been a decrease in the number of unemployment claims. The decrease may be a result of increased consumer confidence as a new COVID-19 stimulus package seems to be readily moving through Congressional chambers and features another, even larger stimulus check. (Consumer confidence is the economic indicator measuring the level of optimism consumers have in not only the country’s economy but their own financial circumstances.)
Housing Market Trends
Through the now year long global pandemic, the United States has seen home sales rise more than 20 percent over the previous year. While the normal annual peak buying season was delayed, the demand for homes remains high as the shortfall in available properties remains. Over the past months, homes listed for sale have spent little time on the market, less than two weeks in most instances. As the available inventory continues to decrease, active listings are down while median sales prices continue to rise, though with less than expected growth over the past several months.
Recent studies show the median list price for homes rose over ten percent to $345,000, one of the highest year over year increases recorded in recent years. Though the monthly numbers show a potential cooling of the market often anticipated by real estate professionals during the winter season.
With consumer confidence rising, though moderately, (the latest reports by the Conference Board Consumer Confidence Index® show the index at 89.3 in January 2021, an increase from December’s level of 87.1) the housing market will likely continue to strengthen.
The unemployment rate decreased by 0.4 percent to a level of 6.3 percent for January, though the level of overall unemployment claims remains high. While there were gains in employment in business and professional services, as well as private and public education, losses in retail, healthcare, transportation, warehousing, and leisure and hospitality offset the gains.
Unemployment claims rose the second week in February 2021 by more than 13,000, bringing the number of claims to 861,000 (initial claims, seasonally adjusted), though the four-week average decreased slightly overall. The job market and employment trends impact the housing market as well as the housing inventory issue. For example, residential construction employment and specialty contractors had substantial job gains which is a positive sign for those in the sector.
The challenge remains, how to alleviate the long-term economic effects resulting from workers without jobs in the labor force, which is, in some ways, more troubling than the elevated unemployment numbers. With decreased labor force involvement, wage growth slows, and, in turn, that can reduce home-buying power. In addition, the shortage of available houses for sale results in the increased price appreciation which then affects overall affordability. Mortgage rates are expected to remain low, and buyers who are employed and searching for homes will keep the demand high, but since real estate prices are increasing at a rate more than double that of wages, buyers will continue to face affordability challenges in the marketplace.
The Coastal Home Team – Experts in Buying and Selling
Whether you are buying or selling in Brevard County, Florida, The Coastal Home Team can help you find the ideal solutions. Bringing extensive knowledge and resources to the table, The Coastal Home Team, led by Lourdes Sliwa, strives to anticipate, respond, and meet the needs of each and every client they serve. The mission at The Coastal Home Team to help you buy or sell, provide the best customers service in the region, and meet or exceed your expectations.