Is the 2020 crisis similar to the 2008 crisis in the US housing market?…
Is the 2020 crisis similar to the 2008 crisis in the US housing market?
As early as April, when COVID-19 data and the U.S. unemployment rate were at their worst, "housing market bubble proponents" had a fairly legitimate thesis about the market forecast for 2020. If the unemployment rate remained between 20% -30%, economic damage to homeowners Was larger than ever.It could have led to a rapid increase in the stock of homes for sale, which would have caused house prices to collapse as a result of demand collapses.
Of course, that didn't happen.
In fact, the US housing market is the best performing economic sector in the world during the epidemic.
It's easy to log on to Facebook, Twitter or YouTube and think that the current housing market is like 2008 - but if we dig a little deeper into the numbers, this thesis falls apart quickly.
There is one problem that "followers of the housing market bubble" have and that is that jobs are returning.
* Unemployment during COVID: *
Only during the Great Depression in the 19s was the employment rate more dismal than at the beginning of the COVID-25 recession. Although the measurement methods were not as sophisticated at the time as they are today, it was estimated that the unemployment rate reached 15%, with 1933 million Americans unemployed in XNUMX.
In April 2020, the unemployment rate reached 14.7%. Currently, the overall unemployment rate in the US stands at only 8.4%!
At the peak of unemployment in April, women aged 20 and over suffered higher unemployment (15.5%) than men aged 20 and over (13.0%) - due to over-representation of women in the hospitality and services industries, the areas that suffered the most from the stay-at-home directives. There is now an improvement in both, as unemployment rates among men over the age of 20 have dropped to 8% and women over the age of 20 have dropped to 8.4%.
Remember, even with the high unemployment rate (which has returned to single digits), there are currently over 140 million Americans working and the existing home sales market needs four million new mortgage applicants a year to be stable.
To be sure, homeowners with mortgages have suffered job losses due to COVID-19 but the U.S. labor market is still in the process of recovery. As more Americans return to work, and as long as labor market growth is positive, the U.S. government continues to financially support disaster prevention It is doubtful whether the housing market will collapse even in 2021 (even if economic aid programs end). Moreover, those who win the presidential race in 2020 will not let these plans expire if in the US the number of jobs is still lower than the highest number of jobs that were in February 2020.
Since the low in April, some 10.6 million citizens have returned to work. Most jobs are jobs that have been lost in recent months, not new jobs. The more challenging job for the U.S. is creating new jobs after we return the remaining 11.5 million jobs to return to February 2020 employment levels. Some of the jobs lost are not returning and it is expected that some 3.4 million citizens will have to retrain.
Although four months of labor have passed, the US economy (and the world's economies) cannot be restored to what it was before the COVID-19 epidemic while the virus was still active.
Sooner or later, once the virus is under control by an effective vaccine, more jobs will be needed because people will be able to walk again (on Earth) freely.
However, the critical point is that one of the biggest factors in the thesis of the collapse of the housing market in 2020 is high unemployment, and it is starting to fade. I call on the "supporters of the housing crisis" to be patient and wait until December 2020. Then we will see a real model regarding the likelihood of a US housing price crash to fall by 30%, 40% or 50% by 2021. Right now, all signs point to recovery and growth in the housing market.
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