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If Unemployment Is High, Who’s Buying All These Homes?

If Unemployment Is High, Who’s Buying All These Homes
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How is it that prices continue to shoot up while unemployment hovers around 7%? The Case-Shiller Index, which tracks homes, announced that September 2020 had the highest level of appreciation for a single month in the last 20 years—that means it was higher than the run-up of 2012 and 2013 and the run-up of 2005 and 2006! A lot of this has to do with the historically low interest rates fueling demand while inventory remains scarce.

Here’s what that data means on a practical level: If you’re considering selling in the next six months, we should be meeting now to strategize so we can maximize your home value with these incredibly favorable market conditions.

At 1:30 in the video above, you’ll see a graph that displays the unemployment numbers for that record-setting September. Note that the highest figures are bunched up toward the right of the graph, representing service industries such as leisure, transportation, and restaurants that have all been devastated by the COVID-19 lockdowns. Workers in this sector of the economy are struggling to make ends meet on a month-to-month basis, and many are being laid off.

“In September 2020, we witnessed the highest single-month appreciation in 20 years.”

Toward the left side of the graph, though, you’ll find the professional and business sector of our economy, as well as the financial and construction sectors; relatively speaking, COVID has had very little impact on the overall health of these sectors, as many workers therein were able to transition to working from home and spring losses were able to be recouped.

As service industries suffer, workers in a multitude of other industries are enjoying job stability and being incentivized by historically low rates to make a move in the market sooner than later; their purchasing power has never been stronger. For serious sellers, listing your home now to capture this demand should be a no-brainer; depending on the specific neighborhood, we’re witnessing 10% to even 20% appreciation in the San Fernando Valley. A top-dollar sale has never been more achievable.

If you have further questions about this or any other real estate topic, just give me a call or send me an email. I’d love to learn more about your situation and find out how I can be of assistance. I look forward to hearing from you soon in this new year!

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