Maybe this really is a K-shaped “recovery.” It would help explain the great mystery of why we’re having a real estate boom at the same time we’re having such high unemployment.
Last week, I talked about how total U.S. personal income was $500 billion HIGHER in August than in March and how that was certainly one reason why the Phoenix real estate market was so hot. I’m not sure of the exact flow of that money into Phoenix real estate but that $500 billion is going somewhere and some amount of it is likely ending up in the super hot Phoenix real estate market.
Here’s some supporting evidence for that theory.
Savings Deposits – Total
A lot of laid-off people have, no doubt, taken money out of their savings but, overall, the amount of money in savings deposits is up 22% from September 2019. People aren’t spending on a lot of things because of COVID-19, especially travel and tourism. In addition, a lot of those $1,200 COVID-19 payments are still in the bank.
Initial Unemployment Claims
On the other hand, a lot of people who first went on unemployment back in March and April are running out of their 6 months of unemployment insurance. Those aren’t the people buying houses in Phoenix but it could have knock-on effects on the economy when they stop receiving – and spending – those unemployment checks.
This whole exploration would fit within the K-Shaped Recovery idea.
If you kept your job, you got the $1,200 COVID-19 money, plus you’re saving a ton of money because you aren’t spending as much on restaurants, travel, etc. It sounds crazy, but the personal financial balance sheets of a lot of people might be stronger than a year ago because of the pandemic economy. Like I mentioned above, savings deposits are up 22% from last September.
And, of course, if you lost your job, it could be really hard to find another one and you’re already really hurting financially.
For U.S. real estate market analysis,
go to Real Estate Decoded.
The weekly number of single-family detached houses hitting the Phoenix market is running very similar to 2019.
The number of single-family houses sold the last 2 weeks was 30% higher than in 2019. No end in sight to the mania.
I had hoped by autumn the market would have worked its way through the COVID-19 disruptions. Nope.
Tell me in the “Comments” what you think.
This information can vary a lot in different parts of metro Phoenix. Your real estate agent can find the data for your specific city or zip code at The Cromford Report.
Note. This post was written on October 18, 2020 but the graphs will be continually updated.