With so much uncertainty during this difficult time, let’s review one of the most common questions right now: When is the economy going to recover?
Even now as we start to talk about businesses reopening, economic activity is still slow across the country. And then as we turn the corner to the second half of the year, we see predictions of positive economic recovery.
There are currently 3 sciences that economists have to deal with. Business science deals with how the economy has rebounded from a similar slowdown in the past. However, with such a unique situation, we also have to layer in health science - when will COVID-19 be under control, and will there be a flare up in the fall? Finally, we have to consider people science - after businesses are fully operational, how long will it take for American consumers to return to normal consumption patterns?
Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of this year. And going forward, we should see a recovery starting in the second half of the year.
Sam Khater, Freddie Mac Chief Economist
This is not 2008 - 42.1% own their home free and clear, and 58.7% of all homeowners now have at least 60% equity. People are not walking away from that kind of equity, so an extraordinary amount of foreclosures is not predicted during and following this difficult time. Of all the homes that have a mortgage on them, the average equity is $177,000.
We can see we’ve hit the apex of people filing unemployment claims, and we’re starting that downward slide now. 85.3% of the country still has their job. 90% of the people surveyed that applied for unemployment said it is a temporary layoff - that they’re going to get their job back soon.
Despite having low inventory of homes for sale, we are seeing very strong buyer demand. Real estate may very well be in a position to assist the economy in its recovery.
So... what's going on in Tallahassee?
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