A visual view of the impact and projections Covid-19 will have on the housing market compared to the Great Recession and the Great Depression. All data and projections are on a national level, as always, consult your Path & Post Real Estate Specialist to discuss strategies for your unique situation.
Annual Home Price Appreciation
The 6 years before the Covid crisis home prices experienced steady appreciation compared to rampant growth before the Great Recession.
Mortgage Credit Availability Index
The MCAI is a barometer on the availability of mortgage credit. Higher index values signal that credit is more available, while lower index values indicate that mortgage credit standards are tighter. Mortgage lending has been much tighter pre-Covid compared to the lax standards before the last crisis.
Months of Inventory For Sale
Prior to the Great Recession of 2008, new construction was out of balance with demand, and supply of homes soared to record highs. Today’s low-inventory of homes on the market will protect home values and help maintain a stable housing market.
Total Equity Cashed Out
Refinancing to take equity of a home to use for personal spending was popular pre-Recession and resulted in many owners being underwater (owing more than it’s worth) on their personal home. Cash-out refinances have been much lower in the years leading up to the Covid-19 crisis.
Due to less cash-out refinances, over half the homes in America have at least 50% equity today. Over one-third of all homes are owned free & clear!
While it is very early to project the long term unemployment rates due to Covid-19, Goldman Sachs is currently projecting 15%. Unemployment may be twice what it was during the Great Recession, it’s likely to be less than the Great Depression.
The depth of unemployment may reach severe problems, but the length of time to recover is projected to be much less. Most experts project a sharp recovery to pre-crisis levels in a few short years.
Given the above data, most of the major financial institutions are predicting a V-Shaped recovery chart.
Charts by Keeping Current Matters
Even though the economy has been placed on pause, it appears home prices will remain steady throughout the crisis.
Consult your Path & Post Real Estate Specialist for specific guidance on your local market and what matters most to you.