Today’s Economic Snapshot
Almost all of our coverage on the Peoples Choice Mortgage blog is geared toward the housing industry in particular. However, the real estate market is intricately tied to the overall health of our nation’s economy. As is the case, it is important to sometimes take a step back and take a broad assessment of important economic trends and data. This broad picture can go a long way toward helping us understand what is happening with the real estate market and what is on the horizon. With that being said, here is an economic snapshot of data and trends that plays a role in the future of the mortgage and housing market.
State of the Pandemic and the Economy
The single largest factor in the direction of the US economy over the past year has been the trajectory of the coronavirus pandemic. It has been almost a full year since masks and lockdowns became a part of our lived reality. One of the keys to seeing our economy get back to pre-pandemic levels is to find a way for our nation to get onto a post-pandemic existence. Basically, we need to make this pandemic a thing of the past if we want to see a booming economy in the future. Thankfully, there are some signs that we are headed in that direction.
It finally seems like we are on the other end of the winter surge. Daily cases and hospitalizations are at their lowest level since last October. At the same time, we are seeing the vaccination effort by our federal and state governments gaining steam. The amount of vaccine doses distributed to state governments and the amount of vaccines being administered have seen a dramatic rise. To help the vaccination effort, Johnson & Johnson were just given emergency approval for distribution of their single dose coronavirus vaccine. Shortly, the Johnson & Johnson vaccine will start being produced and shipped out to states along with the other two vaccines. Declining cases and increases in vaccinations are all welcomed news for our ability to curtail this pandemic and start returning to pre-pandemic routines. Needless to say, we all want this pandemic to end and we are thrilled with any and all good news.
Pandemic Stimulus Is Close To Being Passed
The House of Representatives just passed a $1.9 trillion relief bill that is designed to stimulate the economy and lessen the pandemic’s economic harm. This legislation still has to be approved by the Senate before it goes into law. If it is passed, millions of Americans will receive additional direct stimulus checks. These checks can be used for catching up on bills, spending on special wish list items, or can even be used to help pay the down payment on a new house. Ultimately, when money makes it into the pockets of your average American, it quickly gets put back into the economy in a number of ways.
This relief bill has several implications for the housing market. First, stimulus money can be used by people who are behind on rent or mortgage payments. This can help prevent a future housing market crash that could be triggered through a wave of evictions and foreclosures. Second, this relief bill also extends foreclosure moratoriums, which further reduces the likelihood of an eventual crash. This is great news for homeowners who have been benefiting from the red hot real estate market of the past year. Home prices and values have skyrocketed, which has also increased the size of their equity. Many Americans are building real multigenerational wealth merely by being homeowners. As long as the real estate market can sustain itself, this will be life changing for millions.
Mortgage Delinquency Decreasing
In a bit of economic good news that is specifically about real estate, Freddie Mac is reporting that the serious mortgage delinquency rate decreased in January. This is fantastic news for anyone who fears that a housing crash is around the corner. Many feared that the pandemic would trigger a housing market collapse similar to 2008 when it first started. The reason for this fear was that waves of unemployment would cause many to fall behind on their mortgages. Eventually, mortgage delinquencies would turn to foreclosures, which would flood the market with excess inventory. This in turn would cause home prices to take a nosedive. Thankfully, the opposite happened. Demand for buying a home went through the roof as mortgage rates dropped to historically low levels. Indications that serious delinquency rates are declining is good news for the real estate market and the homeowners all across our nation.
Personal Income Increasing
Another great sign that our economy is headed in the right direction is that personal income increased in January by nearly 10%. That is a significant increase in personal income, which has ramifications for every aspect of our economy. If Americans make more money, they will spend more money, which boosts everything and everyone. Early indications seem to point to this increase in personal income already making its way into the economy. January also saw an increase in consumer spending. Consumer spending is a key indicator of economic health. First, it indicates that people have the money to spend on consumer goods. Second, it indicates that people are confident enough in the direction of the economy that they are willing to spend money on consumer goods. If these trends continue, it can go a long way toward clawing back some of the losses that many industries experienced over the past year.
Final Thoughts
Overall, today’s economic snapshot is filled with a bunch of positive news. Of course, all of this is subject to change. However, good news is better than bad news, and today, there is plenty of it. All together, these economic headlines suggest a bright future for the real estate market. Many Americans took advantage of low mortgage rates to join the ranks of homeowners over the past year. Homeowners in almost every single market benefited from real estate trends over the past year. High demand and low inventory pushed home values higher, which boosted millions of families’ wealth. Today’s economic news points to the possibility that a big economic rebound is on the horizon. If that is the case, then homeowners will continue to see their wealth grow.
If you are not a homeowner and you did not benefit from the rapid rise in home values, do not despair because it is not too late. If we truly are on the precipice of an economic rebound then buying a house now still gives you a chance at continuing to ride the real estate market to more personal wealth. The important thing is to not delay. The longer you wait to become a homeowner, the greater the risk that you miss out on the financial benefits that homeowners have been experiencing for the past year. If you dream of being a homeowner, contact us! The team at Peoples Choice Mortgage is here to help make your dream a reality. We will help you analyze your current financial situation and come up with a plan to try to help you become a homeowner as soon as possible. The bottom line is that good news abounds. There is no reason why you becoming a homeowner shouldn’t be the next positive headline in your own world.
