There is no getting around that compared to almost any other country in the world we are driven by consumerism as it accounts for in excess of 2/3 of our economic activity. Unlike the last recession we experienced, housing was not implicated and happily it looks like its going to be a very important part of the recovery. And why is housing more important than cars, for example? Every dollar spent on housing has a multiplier effect on renovation spending, appliances etc. This housing multiplier effect is what we need now.
As for the actual housing recovery prospects, there are some good numbers to back this up.
Vacant properties for sale are 58% lower than in 2007 and rentals vacancies are 21% lower according to Daniel McCue, Senior Research Associate at Harvard University’s Joint Center for Housing Studies. While this figure is a National one it does reflect what I observed before all this pandemic upended us all. Supply is tight out there in the North Shore.
There is early good news on the mortgage application rates which are 9% up on last year as noted by CNBC. Also the Dept of Commerce has just released figures showing that the sales of new homes in April was up 0.6% over March – most people had expected another decline. But let’s not get too carried away with the good news. The spectacular reduction in un-employment in May 2020 that was so heralded seems to have been a mis-categorization error that affected multiple months of data. High unemployment is predicted by many to be with us for a while and it is official, we are in recession according to the National Bureau of Economic Research (NBER). But hey – I think we all figured out we were in a recession but thanks for the validation!
In this connected economic world good news on the early housing recovery will put pressure on what may be the absolute bottom of the mortgage lending rates. CNBC reports Matthew Graham, COO of Mortgage News Daily. Last week 30 Year Mortgage rates ticked up for the first time in months: “For those with top-tier credit and financials, they may only see an eighth of a point increase, but for those with lower scores and down payments, the jump could be as much as 0.375%.” I guess, yet another good reason not to prevaricate too long if you were planning to buy a house.
For me I am genuinely happy to be finally doing something productive for both myself and my clients, and just as crucially the wider economy. We are launching rockets again so hopefully we will look back to June 2020 as the start of a successful Housing Lift Off.