With more U.S. states reopening for business this summer, and as people start to return to work, we can expect the economy to begin improving. Most expert forecasts indicate this economic recovery will start to happen in the second half of this year. As we get back to work and the financial landscape of the country begins to turn around, many experts also agree that real estate has the potential to lead the way in the recovery process.
According to Ivy Zelman of Zelman & Associates:
“Housing will fare better than expected during this severe downturn.”
In addition, CNBC notes:
“Mortgage demand from home buyers shows unexpectedly strong and quick recovery…The quick recovery has surprised most forecasters.”
Robert Dietz, Chief Economist and Senior Vice President for Economics and Housing Policy of the National Association of Home Builders (NAHB) says:
“Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery.”
One of the big reasons why housing has the potential to be such a driving force is the significant impact it has on the local economy. This impact is particularly strong when a newly constructed home is built and sold. According to a recent study by the National Association of Realtors (NAR), the average new home sale has a total economic impact of $88,416. As outlined in the graphic below, this is a combination of income generated from real estate industries, expenditures, and new home construction. With so many unknowns today, especially in the wake of a worldwide pandemic, one known factor is the bright spark the housing market can play in local and national recovery. Buying and selling a home goes well beyond personal growth and satisfaction – it supports our economy as a whole.
As often happens during a pandemic, inventory plummeted from March-May, but the need to move has not ceased. Relocation, marriage, birth, and death are all reasons why homes continue to be bought and sold. The lack of inventory has contributed to a pent-up demand, and new contracts surged 22% for the Chicagoland market in early June, with 4,434 new contracts being signed the week of 6/1. New listings in Brookfield are down 16% from this time last year. La Grange Park is a little more stable, but new listings are still down by almost 7%. New listings in Burr Ridge are down by 11%, Willowbrook inventory has actually increased by 3%, and Downers Grove is down by about 8%. If you have a home in these areas and have been thinking of selling, now is a great time to capitalize on the demand, which has been created both by inventory shortage and historically-low interest rates.
Bottom Line
According to experts, the economy will begin to recover in the second half of this year. With real estate as a driver, that recovery may start sooner than we think.