What Is the Strongest Tailwind to Today’s Recovering Economy?

 

Last year started off with a bang. Unemployment was under 4%, forecasters were giddy with their projections for the economy, and the residential housing market had the strongest January and February activity in over a decade.

Then came the announcement on March 11, 2020, from the World Health Organization declaring COVID-19 a worldwide pandemic. Two days later, the White House declared it a national emergency. Businesses and schools were forced to close, shelter-in-place mandates were enacted, and the economy came to a screeching halt. As a result, unemployment in this country skyrocketed to 14.9%.

A year later, the economy is recovering, and the U.S. has regained more than half of the jobs that were originally lost. However, some businesses are still closed, and many schools are still struggling to reopen. Despite the past and current challenges, there is one industry that’s proven to be a tailwind helping to counter all of these headwinds to our economy. That industry is housing. Remarkably, the residential real estate market (including existing homes and new construction) has flourished over the last twelve months. Sales are up, prices are appreciating, and more new homes are being built. The housing market has been a pillar of strength in an otherwise slowly recovering economy.

How does the real estate market help the economy?

At the beginning of the pandemic, the National Association of Realtors (NAR) released a report that explained:

“Real estate has been, and remains, the foundation of wealth building for the middle class and a critical link in the flow of goods, services, and income for millions of Americans. Accounting for nearly 18% of the GDP, real estate is clearly a major driver of the U.S. economy.”

The report calculated the total economic impact of real estate-related industries on the economy as well as the expenditures that resulted from a single home sale. At a national level, their research revealed that a single newly constructed home had an economic impact of $88,416.

Here’s how it breaks down:

The map below shows the impact by state:

The impact of an existing home sale is approximately $40,000.

Real estate has done more for our economic wellbeing than virtually any other industry over the last year. It’s been a beacon of light during a very challenging time in our nation’s history.

Bottom Line

Whether you’re buying a newly constructed home or one that already exists, you’re making a positive economic impact in your local community – and it’s a step toward your homeownership goals as well.

Source: Keeping Current Matters | The KCM Crew 03202021

40 LAUREL ST Oakland, TN 38060

Property Site: http://tour.remax-tennessee.com/home/5ZHGR4/40-LAUREL-ST-Oakland-TN-10095254

Gorgeous, Like New 5BR/3BA Home in Quiet Oakland Neighborhood~Formal Dining Room w/Lots of Natural Light~Great Room w/Vaulted Ceiling & Fireplace~Original Floor Plan Modified for More Countertop/Cabinet Space in Kitchen~Granite Counters, SS Appliances & Lovely Cabinets in Open Eat-In Kitchen~Huge Master Bedroom Suite Down w/Stunning Master Bath~2nd BR + Full BA + Laundry Room Also Down~3BR + Full BA + Loft + Expandable Area Up~Beautiful Fenced-In Backyard w/Covered Patio~AND MORE!!

Bedrooms: 5

Bathrooms: 3

Square feet: 3,200

Price: $390,000

For more information about this property, please contact Jennifer Carstensen at 901-685-6000 or jennifer@livelovememphis.com. You can also text 6747213 to 67299 (Message and Data Rates May Apply, see terms and privacy policy).

See more listings at: jcarstensen.remax-tennessee.com

MLS ID: 10095254

https://www.facebook.com/jensellsmemphis https://twitter.com/livelovememphis https://www.youtube.com/c/jennifercarstensenmemphisrealestate

What Is the #1 Financial Benefit of Homeownership?

 

There are many financial and non-financial benefits of homeownership, and the greatest financial one is wealth creation. Homeownership has always been the first rung on the ladder that leads to forming household wealth. As Freddie Mac explains:

“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

Odeta Kushi, Deputy Chief Economist at First American, also notes:

“The wealth-building power of homeownership shows that home is not only where your heart is, but also where your wealth is…For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.”

Last week, CoreLogic released their latest Homeowner Equity Insights Report, which reveals the surge in wealth created over the last twelve months through increased home equity. The report makes five key points:

1. Roughly 38% of all homes are mortgage-free
2. The average equity gain of mortgaged homes in the last year was $26,300
3. The current average equity of mortgaged homes is greater than $200,000
4. There was a 16.9% increase in total homeowner equity
5. Total homeowner equity reached over $1.5 trillion

Here’s a map that shows the equity gains by state:

Increasing equity is giving homeowners the power to better manage the challenges of the pandemic, especially for those spending more time at home. In the report, Frank Nothaft, Chief Economist for CoreLogic, explains:

“This equity growth has enabled many families to finance home remodeling, such as adding an office or study, further contributing to last year’s record level in home improvement spending.”

The financial advantage homeowners have has not gone unnoticed. In the same report, Frank Martell, President and CEO of CoreLogic, states:

“This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake.”

Increasing wealth benefits more than just homeowners.

Last year, the Rosen Consulting Group released a report outlining the benefits of homeownership. In that report, they explained what an increase in net worth – which they call the “wealth effect” – means to the economy:

“In economic literature, the wealth effect is a term used to describe the fact that individuals have a tendency to increase their spending habits when their actual or perceived wealth increases. For homeowners, the latent savings achieved by building equity in their home and the growth in home values over time both contribute to increased net worth. Through the wealth effect, this in turn translates to households having a greater ability and willingness to spend money across a wide range of other types of goods and services that spur business activity and provide a positive multiplier effect that creates jobs and income throughout the economy.”

Bottom Line

Homeownership builds wealth through equity, and this creates a positive impact for homeowners and their communities. Contact your local real estate professional today if you’re ready to invest in a home of your own.

Keeping Current Matters | The KCM Crew 03162021

3380 BLUEBRIDGE LN Lakeland, TN 38002

Property Site: http://tour.remax-tennessee.com/home/QUBL2T/3380-BLUEBRIDGE-LN-Lakeland-TN-10094627

Super Cute Updated 4BR/2.5BA Home~Formal Dining Room w/Lots of Natural Light~Large Great Room + Office/Living Room Space~Spacious Eat-In Kitchen w/Tons of Cabinets, Double Ovens, Breakfast Bar + Pantry~Half Bath + Laundry Room Also Down~Huge Master Bedroom Suite Up w/Double Walk-In Closets & Luxury Update Bath~Three Additional Bedrooms + Full Bath Also Up~Office Space or Bonus Room on 3rd Floor~Amazing Backyard Space Feels like Retreat~2 Car Attached Garage & 2 Car Detached Garage~AND MORE!!

Bedrooms: 4

Bathrooms: 3

Square feet: 2,800

Price: $349,900

For more information about this property, please contact Jennifer Carstensen at 901-685-6000 or jennifer@livelovememphis.com. You can also text 6729197 to 67299 (Message and Data Rates May Apply, see terms and privacy policy).

See more listings at: jcarstensen.remax-tennessee.com

MLS ID: 10094627

https://www.facebook.com/jensellsmemphis https://twitter.com/livelovememphis https://www.youtube.com/c/jennifercarstensenmemphisrealestate

3497 BARTLETT GAP CV Bartlett, TN 38133

Property Site: http://tour.remax-tennessee.com/home/7LTRFS/3497-BARTLETT-GAP-CV-Bartlett-TN-10094161

Super Cute 4BR/3BA Home in Cove~Open Floor Plan~Large Great Room w/Gas Fireplace & Vaulted Ceilings~Spacious Eat-In Kitchen w/Breakfast Bar, SS Appliances, Panty & Tons of Cabinet Space~Hearth Room or Dining Room Off Kitchen~Large Master Bedroom Suite Down w/Luxury Bath + Walk-In Closet~Split Bedroom Floor Plan w/2 Additional Bedrooms + Full Bath Down~Laundry Room Near Master~4th Bedroom Suite Up w/Walk-In Closet + Private Bath~Wonderful Fenced-In Backyard w/Patio~AND MORE!!

Bedrooms: 4

Bathrooms: 3

Square feet: 2,400

Price: $259,000

For more information about this property, please contact Jennifer Carstensen at 901-685-6000 or jennifer@livelovememphis.com. You can also text 6719688 to 67299 (Message and Data Rates May Apply, see terms and privacy policy).

See more listings at: jcarstensen.remax-tennessee.com

MLS ID: 10094161

https://www.facebook.com/jensellsmemphis https://twitter.com/livelovememphis https://www.youtube.com/c/jennifercarstensenmemphisrealestate

297 TREBING PKY Atoka, TN 38004

Property Site: http://tour.remax-tennessee.com/home/6H6AY2/297-TREBING-PKY-Atoka-TN-10094084

Will be sold as-is Advance notice required Home has pets Occupancy a few days after closing preferred

Bedrooms: 3

Bathrooms: 2

Square feet: 1,800

Price: $200,000

For more information about this property, please contact Jennifer Carstensen at 901-685-6000 or jennifer@livelovememphis.com. You can also text 6717133 to 67299 (Message and Data Rates May Apply, see terms and privacy policy).

See more listings at: jcarstensen.remax-tennessee.com

MLS ID: 10094084

https://www.facebook.com/jensellsmemphis https://twitter.com/livelovememphis https://www.youtube.com/c/jennifercarstensenmemphisrealestate

Are There Going to Be More Homes to Buy This Year?

If you’re looking for a home to purchase right now and having trouble finding one, you’re not alone. At a time like this when there are so few houses for sale, it’s normal to wonder if you’ll actually find one to buy. According to the National Association of Realtors (NAR), across the country, inventory of available homes for sale is at an all-time low – the lowest point recorded since NAR began tracking this metric in 1982. There are, however, more homes expected to hit the market later this year. Let’s break down the three key places they’ll likely come from as 2021 continues on.

1. Homeowners Who Didn’t Sell Last Year

In 2020, many sellers decided to pause their moving plans for a number of different reasons. From health concerns about the pandemic to financial uncertainty, plenty of homeowners decided not to move last year.

Now that vaccines are being distributed and there’s a light at the end of the COVID-19 tunnel, it should bring some peace of mind to many potential sellers. As Danielle Hale, Chief Economist at realtor.com, notes:

“Fortunately for would-be homebuyers, we expect sellers to return to the market as we see improvement in the economy and progress against the coronavirus.”

Many of the homeowners who decided not to sell in 2020 will enter the market later this year as they begin to feel more comfortable showing their house in person, understanding their financial situation, and simply having more security in life.

2. More New Homes Will Be Built

Last year was a strong year for home builders, and according to the National Association of Home Builders (NAHB), 2021 is expected to be even better:

“For 2021, NAHB expects ongoing growth for single-family construction. It will be the first year for which total single-family construction will exceed 1 million starts since the Great Recession.”

With more houses being built in many markets around the country, homeowners looking for new houses that meet their changing needs will be able to move into their dream homes. When they sell their current houses, this will create opportunities for those looking to find a home that’s already built to do so. It sets a simple chain reaction in motion for hopeful buyers.

3. Those Impacted Financially by the Economic Crisis

Many experts don’t anticipate a large wave of foreclosures coming to the market, given the forbearance options afforded to current homeowners throughout the pandemic. Some homeowners who have been impacted economically will, however, need to move this year. There are also homeowners who didn’t take advantage of the forbearance option or were already in a foreclosure situation before the pandemic began. In those cases, homeowners may decide to sell their houses instead of going into the foreclosure process, especially given the equity in homes today. Lawrence Yun, Chief Economist at NAR, explains:

“Given the huge price gains recently, I don’t think many homes will have to go to foreclosure…I think homes will just be sold, and there will be cash left over for the seller, even in a distressed situation. So that’s a bit of a silver lining in that we don’t expect a massive sale of distressed properties.”

As we can see, it looks like we’re going to have an increase in the number of homes for sale in 2021. With fears of the pandemic starting to ease, new homes being built, and more listings coming to the market prior to foreclosure, there’s hope if you’re planning to buy this year. And if you’re thinking of selling and making a move, doing so while demand for your house is high might create an outstanding move-up option for you.

Bottom Line

Housing demand is high and supply is low, so if you’re thinking of moving, it’s a great time to do so. There are likely many buyers who are looking for a home just like yours, and there are options coming for you to find a new house too. Contact a local real estate professional today to see how you can benefit from the opportunities available in your local market.

Keeping Current Matters | The KCM Crew 02262021