With the U.S. economy shrinking 3.5 percent during the onset of COVID-19, there was nothing but bad news for the first few months of 2020 with all the unemployment, business foreclosures, and a recession.
However, in just less than a year, the economy has slowly gotten back on its feet, signaling much-needed revitalization. Here are four indicators of this upward trend:
Home Purchase Applications Have Increased
A survey conducted by the Mortgage Bankers Association (MBA) reported a 9 percent increase in home loan applications, a shocking climb compared to a 2019 America without COVID-19.
According to Freddie Mac, this jump was a strategy by the Federal Reserve to encourage consumer lending and spending. And rightfully so, as mortgage rates are nearing or have hit all-time lows.
Basing this on social trends as well, consumer behavior concerning housing may switch between one of two philosophies. The first could be a perceived need for a bigger home to increase social distancing and personal space, while the second is triggered by downsizing to a smaller living space.
Regardless, Americans are more likely to spend on a home loan due to lower prices and perceived living conditions.
And Yet, Current Home Prices Have Steadily Increased
It is common knowledge that houses and lots are a few investments that appreciate instead of depreciating. And despite the pandemic bringing down house costs, current real estate values have continued to rise in the wake of economic stimulation.
Property values dropped a total of 17.8 percent in 2020 but have gone back up 7.4 percent in 2021. That’s a nearly 40 percent bounce back! If you own a house built three or more years before the pandemic, your property’s value will keep on growing despite the 2020 setback.
If you’re thinking of downsizing, you can still sell at breakeven or slightly profitable prices. If you’re looking to buy an existing home, they are at a somewhat more affordable rate since they have not gone back to pre-pandemic values yet.
Unemployment Is Steadily Declining
According to the Bureau of Labor Statistics (BLS), the number of unemployed Americans reached an all-time high of 23.11 million in April 2020, according to the Bureau of Labor Statistics (BLS). That number slowly declined in the subsequent months, hitting about 13.5 million in August 2020.
A year later, the number of unemployed people went down to nearly 8.4 million in August 2021. Similarly, the Department of Labor reported a decrease in unemployment insurance claims.
These statistics mean over 63 percent of unemployed citizens have found work and are ready to purchase (like a home loan). If we look at continuing trends, the remaining 37 percent will be able to find jobs in the coming months and years.
New Home Purchases Have Gone Up
It’s not just pre-pandemic homes that have experienced an economic booster shot. New properties have as well! Though they fell 13.67% in March of last year, purchases of brand-new homes went up 0.6 percent the month after.
This rise can be attributed to several factors. As with the first indicator, the government makes it easier for homebuyers to acquire new properties with all-time low mortgage rates. However, new home prices have also been steadily declining, down 8.58 percent as of April 2020. That means new properties are much more affordable, even with a home loan!
These four indicators are a sign of good things to come for both the housing market and America’s economy as a whole. More money in circulation means the economy can recover, and affordable housing prices contribute to economic stimulation.
Speak to one of our mortgage experts from Total Lending Concepts so you can afford your new home! We can help you with a home loan in Colorado Springs with various options that fit your financial needs. We look forward to showing you what getting a home loan with a little TLC feels like!