Like Southwest Florida, the United States housing market has fared very well in 2020. A robust economy pre covid-19 and low interest rates are two factors that have fueled the real estate market locally and nationally.
We like to analyze data that may affect the market now or in the future. When looking at national unemployment numbers we see that unemployment is falling fast and steadily from its peak in April. The last time we saw double digit unemployment was 2009 and it took 4 years to fall just 2.5%.
We know that our current unemployment rates were forced by the Coronavirus outbreak and was precipitated by forced shutdowns. It is not surprising that we are rebounding so fast and steadily., and yet we know that anyone who lost their job probably lost their ability to pay for housing for any length of time. Thank goodness we had a good economy going into this thing. Imagine how tough this would have been financially back in 2009.
Secondly, we like to look at who was most affected by job loss, as that may leave clues as to what is ahead for the United States housing market. The hardest hit segment is the 24 and under segment with current unemployment at 14.1% They make up 3.0% of all home sales in the United States housing market.
The 25-34 age group has 9.7% unemployment and make up about 25% of all home sales in the United States. Lastly, we see the 35+ group with 6.8% unemployment. They make up 72% of all United States housing market home sales.
Home Sales are Strong
This might explain why home sales have been so strong. The majority of home buyers have been the least affected by unemployment. Low interest rates have helped offset any losses by affected home buyers. Still, 8.4% unemployment and rising home sales may not be sustainable forever. The good news is unemployment should not stay at 8.4% as those numbers are declining rapidly.
We plan to watch these numbers as they should leave clues about what is ahead for the United States housing market. One potential scenario is it could hold back move-up buyers. The 25-34 age group tends to be first time home buyers, and if a significant number hold off purchasing their first home it could impact down the road some move-up buyers who are ready to make their next move.
If the economy keeps improving and we get the service sector back to work, this should all work out. Question marks remain how the travel and tourism segments will fare and people’s willingness to travel until covid-19 is under control. Optimism in the vaccine and treatment fronts abound and this could help that segment recover sooner if therapeutics or prevention pans out.
Florida Looking Good for the Future
While the United States housing market may max out at some point until the economy recovers, Florida is looking rather good as many from out of state have found Florida desirable. Florida is a net migration state from other states, so we may buck the trend if the national United States housing market maxes out someday.
At last check Lee County single family home inventory is down to 2.36 months supply of homes on the market. Buyers must be quick and decisive to score a home in this market. Sellers must be wise and patient, making sure they select the best offer for them, not necessarily the first offer that tried to box them into a quick decision. This is where experienced agents come in.
Experienced buyer agents know how to make your offer as strong as possible. Looking at it from the seller’s eyes is extremely helpful now, and therefore experience matters.
Sellers need experience now more than ever, so be careful trusting your home sale to an agent with little to no listing experience. If you would like to speak to Brett or Sande Ellis about the process, we’re available. Simply call 239-489-4042 Ext 4, or visit www.SWFLhomevalues.com to get a Free estimate of your home’s value.
Good luck and Happy House Hunting!
See last week’s article “Florida Real Estate Demand Heats Up From High Tax State Residents”