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For Buyers For Sellers Housing Market Updates

Will This Economic Crisis Have a V, U, or L-Shaped Recovery?

Many American businesses have been put on hold as the country deals with the worst pandemic in over one hundred years. As the states are deciding on the best strategy to slowly and safely reopen, the big question is: how long will it take the economy to fully recover?

Let’s look at the possibilities. Here are the three types of recoveries that follow most economic slowdowns (the definitions are from the financial glossary at Market Business News):

  • V-shaped recovery: an economic period in which the economy experiences a sharp decline. However, it is also a brief period of decline. There is a clear bottom (called a trough by economists) which does not last long. Then there is a strong recovery.
  • U-shaped recovery: when the decline is more gradual, i.e., less severe. The recovery that follows starts off moderately and then picks up speed. The recovery could last 12-24 months.
  • L-shaped recovery: a steep economic decline followed by a long period with no growth. When an economy is in an L-shaped recovery, getting back to where it was before the decline will take years.

What type of recovery will we see this time?

No one can answer this question with one hundred percent certainty. However, most top financial services firms are calling for a V-shaped recovery. Goldman Sachs, Morgan Stanley, Wells Fargo Securities, and JP Morgan have all recently come out with projections that call for GDP to take a deep dive in the first half of the year but have a strong comeback in the second half.Will This Economic Crisis Have a V, U, or L-Shaped Recovery? | Simplifying The Market

Is there any research on recovery following a pandemic?

There have been two extensive studies done that look at how an economy has recovered from a pandemic in the past. Here are the conclusions they reached:

1. John Burns Consulting:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

2. Harvard Business Review:

“It’s worth looking back at history to place the potential impact path of Covid-19 empirically. In fact, V-shapes monopolize the empirical landscape of prior shocks, including epidemics such as SARS, the 1968 H3N2 (“Hong Kong”) flu, 1958 H2N2 (“Asian”) flu, and 1918 Spanish flu.”

The research says we should experience a V-shaped recovery.

Does everyone agree it will be a ‘V’?

No. Some are concerned that, even when businesses are fully operational, the American public may be reluctant to jump right back in.

As Market Business News explains:

“In a typical V-shaped recovery, there is a huge shift in economic activity after the downturn and the trough. Growing consumer demand and spending drive the massive shift in economic activity.”

If consumer demand and spending do not come back as quickly as most expect it will, we may be heading for a U-shaped recovery.

In a message last Thursday, Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, agrees with other analysts who are expecting a resurgence in the economy later this year:

“We’re forecasting real economic growth of 30% for the U.S. in the 4th quarter of this year and 6.1% in 2021.”

His projection, however, calls for a U-shaped recovery based on concerns that consumers may not rush back in:

“After the steep plunge and bottoming out, a ‘U-shaped’ recovery should begin as consumer confidence slowly returns.”

Bottom Line

The research indicates the recovery will be V-shaped, and most analysts agree. However, no one knows for sure how quickly Americans will get back to “normal” life. We will have to wait and see as the situation unfolds.

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For Buyers For Sellers Housing Market Updates Uncategorized

The Pain of Unemployment: It Will Be Deep, But Not for Long

There are two crises in this country right now: a health crisis that has forced everyone into their homes and a financial crisis caused by our inability to move around as we normally would. Over 20 million people in the U.S. became instantly unemployed when it was determined that the only way to defeat this horrific virus was to shut down businesses across the nation. One second a person was gainfully employed, a switch was turned, and then the room went dark on their livelihood.

The financial pain so many families are facing right now is deep.

How deep will the pain cut?

Major institutions are forecasting unemployment rates last seen during the Great Depression. Here are a few projections:

  • Goldman Sachs – 15%
  • Merrill Lynch – 10.6%
  • JP Morgan – 8.5%
  • Wells Fargo – 7.3%

How long will the pain last?

As horrific as those numbers are, there is some good news. The pain will be deep, but it won’t last as long as it did after previous crises. Taking the direst projection from Goldman Sachs, we can see that 15% unemployment quickly drops to 6-8% as we head into next year, continues to drop, and then returns to about 4% in 2023.

The Pain of Unemployment: It Will Be Deep, But Not for Long | MyKCM

When we compare that to the length of time it took to get back to work during both the Great Recession (9 years long) and the Great Depression (12 years long), we can see how the current timetable is much more favorable.

Bottom Line

It’s devastating to think about how the financial heartache families are going through right now is adding to the uncertainty surrounding their health as well. Hopefully, we will soon have the virus contained and then we will, slowly and safely, return to work.

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For Buyers

How Technology is Helping Buyers Navigate the Home Search Process

Some Highlights:

  • A recent survey revealed that buyers are still considering moving forward with the home buying process, even if they can’t see the home in-person.
  • While they still prefer to physically see a home, virtual home tours, and accurate listing information top the list of tech specs buyers find most helpful in today’s process.
  • Let’s connect today to determine how technology can help power your home search.
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For Buyers For Sellers Pricing

Today’s Homebuyers Want Lower Prices. Sellers Disagree.

The uncertainty the world faces today due to the COVID-19 pandemic is causing so many things to change. The way we interact, the way we do business, even the way we buy and sell real estate is changing. This is a moment in time that’s even sparking some buyers to search for a better deal on a home. Sellers, however, aren’t offering a discount these days; they’re holding steady on price.

According to the most recent NAR Flash Survey (a survey of real estate agents from across the country), agents were asked the following two questions:

1. “Have any of your sellers recently reduced their price to attract buyers?”

Their answer: 72% said their sellers have not lowered prices to attract buyers during this health crisis.

2. “Are home buyers expecting lower prices now?”

Today’s Homebuyers Want Lower Prices. Sellers Disagree. | MyKCM

Their answer: 63% of agents said their buyers were looking for a price reduction of at least 5%.

What We Do Know 

In today’s market, with everything changing and ongoing questions around when the economy will bounce back, it’s interesting to note that some buyers see this time as an opportunity to win big in the housing market. On the other hand, sellers are much more confident that they will not need to reduce their prices in order to sell their homes. Clearly, there are two different perspectives at play.

Bottom Line

If you’re a buyer in today’s market, you might not see many sellers lowering their prices. If you’re a seller and don’t want to lower your price, you’re not alone. If you have questions on how to price your home, let’s connect today to discuss your real estate needs and next steps.

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Home Improvement

7 Ways to Enjoy the Home Outdoors

In this current moment when many of us are staying home, one of the best remedies to help alleviate some of the stress is to head outside and get some fresh air – preferably at least six feet or more away from your neighbor. If you’re lucky enough to have an outdoor space, whether you have a sprawling backyard or a smidgen of a patio, make the most of your home outdoors with these seven ideas for improving your outdoor area.

Curate an outdoor lounge space

Had to cancel a beach vacation you planned for spring break or summer? Set up an outdoor lounge space on your patio or in the yard to give your outdoor space a tropical feel. You can either scour the internet for lounge chairs, chaise lounges, hammocks, and outdoor sectionals or create your own, like a one-of-a-kind outdoor lounge bed. All you need to complete this project is a platform bed frame, a futon mattress, and outdoor fabric to cover it. (If you’re not handy with the sewing machine, this would be a simple task for a local upholsterer to tackle.) Plop some outdoor pillows on top for added comfort and style. 

To complete your lounge, add in some side tables, a few candles, and maybe a glass of wine to create that all-inclusive atmosphere.

DIY outdoor movie theater

The movie theaters may be off-limits for now, but that doesn’t mean you can’t re-create the experience in your own private outdoor space. Though you’ve likely seen elaborate backyard movie theater setups, it doesn’t have to be complicated: All you need is a white sheet that can be tautly mounted on a flat surface (a shed or siding on your apartment patio will do just fine), a projector and your phone to play movies, TV shows or whatever else you’re binging these days. 

Don’t have access to a projector? It’s surprisingly simple to make one out of a shoebox, some cardboard, and a magnifying glass. Round up your favorite patio chairs or arrange your outdoor cushions, make some popcorn, and enjoy your movie with the background noise of the crickets chirping.

Create an outdoor bar

It may be a while before you can go back to your favorite dive bar or swanky cocktail lounge, so why not create your own for your outdoor space? You can, of course, buy a bar online, or you can repurpose an old table or desk – or even get crafty with some cinder blocks, concrete glue, and a few 1 x 6 boards to create your very own. Gather your Bluetooth speaker, your favorite cocktail ingredients and a few glasses to get the ambiance of your favorite bar right at home. Here are a few ideas for inspiration, including bars you can squeeze into the smallest of outdoor spaces. 

Beautify a barn or shed

A barn or a shed is a utilitarian structure, but that doesn’t mean it has to be an eyesore. Spruce it up by painting it a bold color, attaching some shutters, adding some flower boxes, installing a stone path or even stringing up some lights to zhuzh up that forgotten space in the backyard. 

DIY fire pit

Just because many of the state parks or campsites are closed doesn’t mean you have to miss out on everyone’s favorite camping activity: the campfire. You can easily create a DIY fire pit for your backyard in seven steps, which only requires a few supplies you can pick up curbside at your local home improvement store. Not a big DIYer? You can always buy a prefab fire bowl that’s just as effective at creating that warm, cozy campfire glow.

Make an al fresco dining destination

We’re all getting a little tired of eating in our kitchens (or, maybe in front of our televisions) night after night. Mix it up a little by making an al fresco dining destination in your backyard or patio. In addition to an outdoor dining table and chairs, lay down an outdoor rug and string up a strand of lights or craft yourself an outdoor chandelier to transform your evening meals. 

Create a meditation zone

Missing your yoga studio? You can still do a restorative practice and a Shavasana at home – and make it even better by creating a meditation zone in your backyard. Plant a garden with calming scents like lavender or jasmine, create a stepping stone path to your meditation spot or even build yourself a standing tent or cabana with curtains that blow in the warm, calming breeze.