Wednesday, April 15, 2020 / by Sonya Reiselt
How Will Surging Unemployment Affect Home Sales in Beaufort County?
As we speak right now, millions of Americans are losing their jobs or at least out of work until the economy restarts. Many are feeling the financial crunch. The Federal and South Carolina governments are working to find ways to help those in financial need. Even so, there's doubt as to when people can start returning to work.
One major concern is whether high unemployment rates will cause the real estate market in Beaufort County, as well as the rest of the nation, to crash. The overall economy, after all, is affected by the housing industry.How has the unemployment rate affected home sales in the past?
It's reasonable to think that the unemployment rate would correlate with home sales. So if more people are unemployed, fewer people would buy home, and vice versa.
The interesting thing is that if you look at previous recessions, we don't see that happening. Look at these numbers:
- The unemployment rate was rising between 1992-1993, yet home sales increased.
- The unemployment rate was rising between 2001-2003, and home sales increased.
- The unemployment rate was rising between 2007-2010, and home sales significantly decreased. This decrease was caused by the housing bubble burst, which was the cause of that recession.
- The unemployment rate was falling continuously between 2015-2019, and home sales remained relatively flat.
Isn’t this time different?
The impact of the unemployment rate on home sales doesn’t seem to be as strong as we may have thought.
How does this compare to other large recessions?
Yes, it is. We are definitely seeing startling job losses. But how bad can it get? According to Goldman Sachs, they project that the unemployment rate will be 15% in the third quarter of 2020, flattening to single digits by the fourth quarter of this year, and then just over 6% percent by the fourth quarter of 2021. This may not be the best scenario, but it's actually manageable.
Some believe this is going to be reminiscent of The Great Depression. From the standpoint of unemployment rates alone, it does not compare.
What Does This Mean for Home Buyers and Sellers in Beaufort County?
If you plan to buy or sell a home in Beaufort County, now is actually not a time to panic. Yes, the housing market is and will be affected, but there's no sign it will collapse, certainly not to the degree it did in the great recession.
Actually, if you are financially secure enough to buy a home in Beaufort County, now is an ideal time. Mortgage rates are at an all-time low, and there are fewer buyers to compete with. This means that we are in a buyer's market. That means that you can also negotiate a better deal on a home in Beaufort County.
And for those of you who want to sell your home in Beaufort County, there are definitely still buyers looking for a home. We'll be happy to help you find those buyers and sell your home in these difficult times.
Yes, these are definitely challenging times. But as in the past, if we work together to face this challenge, we will come out stronger in the end.
Looking to buy a home in Beaufort County? Visit our home search feature to find the perfect home for sale. Visit our blog every week for more helpful real estate advice, along with local articles about life in the Lowcountry.