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Unemployment Is Painful. #brokermac
May 11, 2020 at 7:38am | Mac Rogers
guys I was just on a conference call going over the most recent unemployment numbers and I just wanted to share it with you. The numbers was just released and no surprise. It was bad. This coronavirus has caused two big crises right now. A pandemic that
has forced a majority of the world population into our respective homes which in turn has caused an economic shut down. A health and financial crises. Our two biggest challenge.
This is Mac with Albert Rogers Realty, here in Castro Valley CA. If you are new to the channel, I do real estate market updates. If you like the information or want to stay updated, please go ahead like and subscribe below.
With over thirty-three million people unemployed, we went from one of the longest and prosperous economic times to the fastest decline in history! How painful and how deep the situation is felt by so many families right now.
Take a look at the weekly unemployment filing. The following chart gives you a picture of what is going on.
Look at he numbers from March all the way to the beginning of May.
On the next chart you see the percentage of all unemployed by category.
Again no surprise here. With restaurants being shut down you see that bartenders and servers making a bulk of the unemployed.
As you go down the line you see retail and temporary services at around 10%. The rest of the industries getting affected around 6% and so on.
Now a lot of these lost jobs should return once we restart the economy. Take a look at this next chart.
We can focus on the negative and say that we have a 15% unemployment right now or we can look at this as 85% of the workforce is still employed. I am not making light of what is happening to people losing their jobs but merely pointing out a fact.
Here's another fact, 90% of those surveyed that was unemployed, they responded that their situation is temporary. Meaning that they expect to be back to work.
So the question that I keep getting asked is this, with all these things going on, when will real estate prices go down?
The short answer is probably not anytime soon. And here's the reason why.
Take a look at the next pie chart. As you can see 42.1% of homes right now are mortgage free! That's a big percentage of homeowners that own their home free and clear. And if you go down the line you see that a majority of homeowners have equity in
58% of all homes have atleast 60% equity! Homeowners are sitting on average $177,000 in equity. No one would walk away from that.
I think people that are thinking that this is another repeat of 2008 really have to take this into consideration. Last time, a lot of homeonwers had negative equity in their homes and that's why they were walking away and that's why prices plummeted.
This is definitely not the same situation.
So how fast can we recover or how long will this last and how deep will this recession be?
The bright spot on this is that most financial institutions are not projecting this to be a long recession. Most of these institutions are calling for the economy to be back by the third quarter.
Goldman Sachs projects that from a 15% unemployment, that number goes back down to 6% then to 8% as we head into next year. And then around 4% till about 2023. Still not where we were before the pandemic but definitely more manageable.
Comparing this to how long it took to get back to work during the Great Recession (9 years long) and the Great Depression (12 years long), this definitely is something we can look forward to.
This is most likely of very little comfort to families that are affected coupled with uncertainty surrounding our health. Yet, we can be hopeful that this virus will soon be contained and then, we can slowly and safely and surely return to work.
Let me end this with this. I heard a saying, "if you will doubt something, doubt your limits."
Stay safe and have a great day and happy mother's day.