As businesses across the United States have been mandated to close their doors in a desperate effort to slow the spread of COVID-19, people have been losing their jobs left and right. Now, we’re seeing the first unemployment report since the first “shelter in place” orders, and it’s far more grim than anyone had expected.
Acording to a report on Realtor.com, a record 3.28 million Americans filed for unemployment support in the week ending March 21—the most claims ever filed in a single week.
It will also be a tough blow to the already wobbly housing market, since those who lost their jobs are not likely to be buying a home anytime soon. Even the millions of Americans who haven’t been laid off or lost work yet are likely to hold off on a major purchase, fearing for the stability of their employment. And while ultrawealthy buyers may be insulated from the downturn, they may still balk at plunking down millions of dollars on a property they can’t even walk through. In response to this lack of demand, many sellers will likely pull their properties off the market until the crisis passes.
However, folks shouldn’t expect home prices to plunge by the double digits as they did during and after the Great Recession. In the last downturn, there were many more properties for sale, due to an overabundance of construction and mass foreclosures, than there were qualified buyers.
This time around, there is a severe shortage of housing for sale. Builders haven’t been putting up enough homes to meet demand for years. And there isn’t likely to be a huge wave of foreclosures because borrowers are in better financial shape. Plus, the federal and many state governments, along with some banks, are rolling out forbearance and other programs to help Americans who’ve lost their jobs stay in their homes. This is all likely to stabilize prices.