Four Reasons Why The Housing Market Will Impact The Economy

Posted by Kathryn Vallee on Tuesday, May 19th, 2020 at 8:42am.

Housing Market Positioned to Bring Back the Economy

Housing Market Positioned to Bring Back the Economy | Kathryn Vallee

In Park City, it has been since March 9, 2020 since the stay-at-home orders and social distancing measures began. As for the United States, it has been 8-12 weeks since the first stay-at-home orders were announced for many states amid the coronavirus pandemic. For several weeks now,  I have had many conversations about the Park City and the real estate market in general. There is apprehension about the future and  "The American economy" and "The world economy".

All eyes look toward the future.

 

Many states are beginning to reopen, the question becomes "Is The Housing Market Positioned To Bring Back The Economy?" Nearly two months since the social distancing measures began, more than 35 states have started to reopen their economies.With states beginning to reopen, the question becomes: which sectors of the economy will drive its recovery? There seems to be a growing consensus that the housing market is positioned to be that driving force, the tailwind that is necessary. Some may question that assertion as they look back on the last recession in 2008 when housing was the anchor to the economy – holding it back from sailing forward. But even then, the overall economy did not begin to recover until the real estate market started to regain its strength. This time, the housing market was in great shape when the virus hit. As Mark Fleming, Chief Economist of First American, recently explained:

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Fleming is not the only economist who believes this. Last week, Dr. Frank Nothaft, Chief Economist for CoreLogic, (@DrFrankNothaft) tweeted:

“For the first 6 decades after WWII, the housing sector led the rest of the economy out of each recession. Expect it to do so this time as well.”

And, Robert Dietz, Chief Economist for the National Association of Home Builders, in an economic update last week explained:

“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt…Based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”

Is The Park City Real Estate Market Dropping?

The Park City Board of Realtors Q1 2020 made the following statement:

"April 29, 2019 – At the end of the first quarter of 2020, the importance of tracking trends in year-over-year housing statistics for Summit and Wasatch Counties continued to pale in the face of the growing influence and impact of the COVID-19 on the industry. The numbers show strong appreciation with increases in both average and median sale price as well as dollar volume as reported by the Park City Board of REALTORS® Multiple Listing Service. But the effect of the virus, which hit Utah in mid-March and prompted isolation orders for citizens and closures of nearly all small businesses across the region has yet to be fully realized in the numbers."

Bottom Line Every time a home is sold it has a tremendous financial impact on local economies. As the real estate market continues its recovery, it will act as a strong tailwind to the overall national economy.

Did you know? 

We offer far more than just a pretty Park City real estate website! We can provide you COMPLETE market evaluations for your home, take you on a VIRTUAL walkthrough of any property, and even offer assistance with special circumstances (divorce, estates & probate, 1031 tax exchanges, trusts and other more complicated real estate transactions) where needed. We have the experience to make your real estate vision a reality. Call us today for a consultation. We are happy to assist you!

 

How Much is Your Home Worth??

Whether you are thinking of selling now or some point in the future, you can ALWAYS check your homes value with us! We prepare a professional market analysis with no cost or obligation to any home or condo owner in the Park City area. Automated Valuation tools are notoriously innaccurate in our area. Let us provide you with the information you need!

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