The housing market has been one of the most affected areas of the economy by the coronavirus pandemic. As the economy sunk to unprecedented levels in the last couple months, certain signs indicate the housing market may be coming back to life. While we have been here for our borrowers who have continued to refinance and purchase their dream homes, there are signs the housing market is headed toward growth.
Purchase applications were one of the most affected areas of the economy since the pandemic, making them a sensitive and strong indicator of a rebounding economy. The Mortgage Bankers Association shows that mortgage purchase applications rose 6.7% higher than a year ago, which says a lot considering we were not in the thralls of a pandemic last year. Plus, purchase applications have been increasing for 6 weeks in a row. This increase in purchase applications tells us that growth may be on the way.
Another indication we can look to in order to determine the status of our economy’s recovery is the status of the curve – is it flat or flattening? As long as the virus is still being spread and isn’t contained, we cannot go back to work and work on reopening our economy. When we see the curve flatten, more and more people will resume their home purchasing and selling activity, and we can begin to rebuild our housing market. We have seen significant improvement in the containment of the virus, and we may be getting close to a flat curve, but we still have work to do and must continue our efforts.
Once businesses reopen and the stay at home order is revoked, that will be a strong indication of movement toward economic growth. We are just entering the early stages of reopening, and as people begin to leave their homes once again, we will likely see many of them participating in the housing market.
One metric commonly used to measure the state of the economy is the St. Louis Financial Stress Index. This metric showed a spike in financial stress on March 20th. However, since then, we are seeing a decrease in financial stress. While we are not there yet, we are on our way to more stable economic conditions that help lead to a healthy housing market.
With over 38.6 million Americans filing for unemployment suddenly due to the coronavirus pandemic, this was a major measure of the state of the economy and housing markets. The rate at which unemployment was growing has decreased in the last week, hopefully pointing toward a trend of economic improvement as the unemployment growth slows down. As long as unemployment continues to slow down, this may be an indication that we are heading back to stable conditions.
A common method of determining the state of the economy is through the 10-Year Yield. Once we see a 10-Year Yield above 1%, we can take that as a good sign of a growing economy and housing market. With 10-Year Yields below 1%, we’re not there yet. However, despite the negative economic impact of the pandemic, the 10-Year Yield remained relatively high, perhaps in expectation of improved times ahead. As other factors such as decreases in unemployment, lifting of the stay at home order, and the flattening of the curve come into play, we may see this metric increase which would further signify a strengthening economy.
As we pay attention to these indicators and we notice the housing market rebound, you may find yourself stepping into the housing market once again. Whatever your needs are, we are here to help you, no matter how difficult and confusing the times are. Contact us today to find out how we can help you achieve your ownership goals.
McGlone Mortgage Group offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.