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

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.

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.

See our link to Red Baron Real Estate Home Page

Think This Is a Housing Crisis? Think Again.

Think This Is a Housing Crisis? Think Again.

With all of the unanswered questions caused by COVID-19 and the economic slowdown we’re experiencing across the country today, many are asking if the housing market is in trouble. For those who remember 2008, it's logical to ask that question.

Many of us experienced financial hardships, lost homes, and were out of work during the Great Recession – the recession that started with a housing and mortgage crisis. Today, we face a very different challenge: an external health crisis that has caused a pause in much of the economy and a major shutdown of many parts of the country.

Let’s look at five things we know about today’s housing market that were different in 2008.

1. Appreciation

When we look at appreciation in the visual below, there’s a big difference between the 6 years prior to the housing crash and the most recent 6-year period of time. Leading up to the crash, we had much higher appreciation in this country than we see today. In fact, the highest level of appreciation most recently is below the lowest level we saw leading up to the crash. Prices have been rising lately, but not at the rate they were climbing back when we had runaway appreciation.

2. Mortgage Credit

The Mortgage Credit Availability Index is a monthly measure by the Mortgage Bankers Association that gauges the level of difficulty to secure a loan. The higher the index, the easier it is to get a loan; the lower the index, the harder. Today we’re nowhere near the levels seen before the housing crash when it was very easy to get approved for a mortgage. After the crash, however, lending standards tightened and have remained that way leading up to today.

3. Number of Homes for Sale

One of the causes of the housing crash in 2008 was an oversupply of homes for sale. Today, as shown in the next image, we see a much different picture. We don’t have enough homes on the market for the number of people who want to buy them. Across the country, we have less than 6 months of inventory, an undersupply of homes available for interested buyers.

4. Use of Home Equity

The chart below shows the difference in how people are accessing the equity in their homes today as compared to 2008. In 2008, consumers were harvesting equity from their homes (through cash-out refinances) and using it to finance their lifestyles. Today, consumers are treating the equity in their homes much more cautiously.

5. Home Equity Today

Today, 53.8% of homes across the country have at least 50% equity. In 2008, homeowners walked away when they owed more than what their homes were worth. With the equity homeowners have now, they’re much less likely to walk away from their homes.

Bottom Line

The COVID-19 crisis is causing different challenges across the country than the ones we faced in 2008. Back then, we had a housing crisis; today, we face a health crisis. What we know now is that housing is in a much stronger position today than it was in 2008. It is no longer the center of the economic slowdown. Rather, it could be just what helps pull us out of the downturn.

Visit our Website:  Red Baron Real Estate

How Much “Housing Wealth” Can You Build in a Decade?

How Much “Housing Wealth” Can You Build in a Decade?

How Much “Housing Wealth” Can You Build in a Decade?  Earlier this month, the National Association of Realtors (NAR) released a special study titled Single-Family Home Price Gains by Years of Tenure. The study estimates median home price appreciation over the last 30 years based on the length of homeownership.

Below are three graphs depicting the most important data revealed in the study.

How much have home prices increased?

One of the first measures of the financial benefits of homeownership is the net worth (in the form of equity) an owner can build over time. The study showed the average increase in home values based on how long homeowners stayed in a home.

What was the percentage of appreciation?

Another way to look at this is by the percentage increase in value over time, called appreciation:

Was this appreciation consistent throughout the country?

Today, when we think of markets that have done well over the last decade, we have a tendency to think about San Francisco, San Diego, Seattle, and other West Coast cities. Though it is true the West Region showed the highest price growth over the last three decades, we can see how every region of the country did quite well in ten-year increments:This data validates the claim that homeownership is great for building wealth. The importance of this information was highlighted in the study’s first sentence:

“Homeownership is an important source of wealth creation, enabling current homeowners and succeeding generations to move up the economic ladder.”

Bottom Line

Homeownership has many financial and non-financial benefits. The accumulation of “housing wealth” through increased equity is a major one. If you’re thinking of buying a home for the first time or moving up to your dream home, the sooner you make the move, the sooner your net worth will begin to grow.

Check out the Red Baron Real Estate Web Site For All Real Estate Needs

Three Reasons Why Pre-Approval Is the First Step in the 2020 Home buying Journey

Three Reasons Why Pre-Approval Is the First Step in the 2020 Home buying Journey

When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the home buying process.

1. Gain a Competitive Advantage

Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Home Buying Process

Pre-approval can also speed up the hom buying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

1. Capacity: Your current and future ability to make your payments
2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

While there are still many additional steps you’ll need to take in the home buying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

Bottom Line

Getting started with pre-approval is a great way to begin the home buying journey. Let’s get together today to make sure you’re on the fastest path to homeownership.

About Rick Frissell aka The Red Baron of Real Estate

Rick Frissell, your Valrico FL Real Estate agent can help you find your perfect home. Learn about Valrico FL neighborhoods, Valrico FL suburbs, and the best places to live in Valrico FL.

You will find a wealth of useful Real Estate information for home buyers and sellers at our website! Before you buy or sell a home, be sure to either contact me or view the current market information here within my website.

My web site is intended to supply you with the most recent Real Estate market information for Bloomingdale Valrico Real Estate, Tampa Florida Real Estate, Plant City Florida Real Estate, Dover Florida Real Estate, Seffner Florida Real Estate, Brandon Florida Real Estate, Apollo Beach Florida Real Estate, Riverview Florida Real Estate, Valrico Florida Real Estate and the surrounding areas.

I feature a free, up to date and current Real Estate search that will allow you to search just like an agent. There are many places out there to search, the challenge is finding a place that offers current listings like my website. All the data is fed directly from the MLS.

As a current resident in Brandon, FL I am fully aware of the current market trends and what it takes to get a great deal on a listing or get top dollar for your current home. When it comes to getting the job done right, you can count on me.

We have a lot of connections within the Valrico FL area. Please don’t hesitate to call and ask me any questions you might have. This process is all about you and your needs. Real Estate is a big investment and I understand that. One thing you will get with me is a personal relationship, In the end, that goes a long way.

My area is a great place to live! For more information, please give me a ring or email me today. I would love the opportunity to earn your business and partner with you in regards to your Real Estate needs.

Red Baron Home Search Website

First-Time Buyers Are Searching for Existing Homes This Year

First-Time Buyers Are Searching for Existing Homes This Year

In the latest Housing Trends Report, the National Association of Home Builders (NAHB) measured the share of adults planning to buy a home over the next 12 months. The report indicates the percentage of all buyers that will be first-time buyers looking to purchase a home grew from 58% in Q4 2018 to 63% in Q4 2019.

The results revealed,

“Millennials are the most likely generation to be making plans to purchase a home within a year (19%), followed by Gen Z (13%) and Gen X (12%)…Prospective buyers in the youngest two generations are primarily first-time buyers:  88% of Gen Z buyers and 78% of Millennial buyers are reaching out to homeownership for the first time in their lives.”

With a high demand from first-time homebuyers and a shortage of inventory in the current market, selling your existing home this year might be your best move. Why? Because when homebuyers begin their search, they’re not all looking for new construction. Many are eager to find a little charm and character in a place to call home – possibly yours.

In fact, according to the same study, there is a significant demand for existing homes:

“In terms of the type of home these prospective home buyers are interested in, 40% are looking to buy an existing home and 19% a newly-built home. The remaining 41% would buy either a new or existing home.”

With showing activity up among buyers and more new construction coming to market, as a homeowner, you have the opportunity to sell your existing house now and move up into a new one, or downsize into a home that better fits your current and ever-changing needs.

Bottom Line

Not all buyers are looking for a newly built house. If you’re ready to take advantage of low mortgage rates and a high demand for your existing home, let’s get together to determine how we will market the charming details of your current house to potential buyers.

More Blogs by Rick Frissell aka The Red Baron of Real Estate

Rick Frissell, your Valrico FL Real Estate agent can help you find your perfect home. Learn about Valrico FL neighborhoods, Valrico FL suburbs, and the best places to live in Valrico FL.

You will find a wealth of useful Real Estate information for home buyers and sellers at our website! Before you buy or sell a home, be sure to either contact me or view the current market information here within my website.

My web site is intended to supply you with the most recent Real Estate market information for Bloomingdale Valrico Real Estate, Tampa Florida Real Estate, Plant City Florida Real Estate, Dover Florida Real Estate, Seffner Florida Real Estate, Brandon Florida Real Estate, Apollo Beach Florida Real Estate, Riverview Florida Real Estate, Valrico Florida Real Estate and the surrounding areas.

I feature a free, up to date and current Real Estate search that will allow you to search just like an agent. There are many places out there to search, the challenge is finding a place that offers current listings like my website. All the data is fed directly from the MLS.

As a current resident in Brandon, FL I am fully aware of the current market trends and what it takes to get a great deal on a listing or get top dollar for your current home. When it comes to getting the job done right, you can count on me.

We have a lot of connections within the Valrico FL area. Please don’t hesitate to call and ask me any questions you might have. This process is all about you and your needs. Real Estate is a big investment and I understand that. One thing you will get with me is a personal relationship, In the end, that goes a long way.

My area is a great place to live! For more information, please give me a ring or email me today. I would love the opportunity to earn your business and partner with you in regards to your Real Estate needs.

The New Spring Real Estate Market is Here. Are You Ready?

The New Spring Real Estate Market is Here. Are You Ready?

The new spring real estate market is here.  Are you ready?  While there is not much snow in Valrico FL, the image reminds us that that the upcoming Spring is buying season.  Which month do you think most people who are considering buying a home actually start their search? If you’re like most of us, you probably think the surge happens in the spring, likely in April. Not anymore. According to new research, January 2019 was only 1% behind February for the most monthly views per listing on realtor.com.

So, what does that mean? The busiest season in real estate has just begun.

The same research indicates,

“Historically, April launched the kickoff of the home shopping season as buyers would come out of their winter hibernation looking for their new home. However, the spring shopping season now starts in January for many of the nation's largest markets.”

With the reality of fewer homes on the market in the winter, and that supply naturally increases as we head to the spring market, waiting for more competition to list in your neighborhood this year might put you behind the curve. Perhaps now is the time to jump into the market.

George Ratiu, Senior Economist at realtor.com says,

“As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier.” 

There is a lot of speculation in the market about why the search for a home is shifting to an earlier start. The one thing we do know is if you’re thinking about buying or selling a home this year, the earlier you get started, the better.

Reminder: When should you sell something? When there is less of that item for sale and the greatest number of buyers are in the market. That’s exactly what is happening in real estate right now.

Bottom Line

The new spring market for real estate is underway. If you’re considering buying or selling, let’s connect, so you have the advantage in this competitive market.

START YOUR HOME SEARCH HERE

Rick Frissell, your Valrico FL Real Estate agent can help you find your perfect home. Learn about Valrico FL neighborhoods, Valrico FL suburbs, and the best places to live in Valrico FL.

You will find a wealth of useful Real Estate information for home buyers and sellers at our website! Before you buy or sell a home, be sure to either contact me or view the current market information here within my website.

My web site is intended to supply you with the most recent Real Estate market information for Bloomingdale Valrico Real Estate, Tampa Florida Real Estate, Plant City Florida Real Estate, Dover Florida Real Estate, Seffner Florida Real Estate, Brandon Florida Real Estate, Apollo Beach Florida Real Estate, Riverview Florida Real Estate, Valrico Florida Real Estate and the surrounding areas.

I feature a free, up to date and current Real Estate search that will allow you to search just like an agent. There are many places out there to search, the challenge is finding a place that offers current listings like my website. All the data is fed directly from the MLS.

As a current resident in Brandon, FL I am fully aware of the current market trends and what it takes to get a great deal on a listing or get top dollar for your current home. When it comes to getting the job done right, you can count on me.

We have a lot of connections within the Valrico FL area. Please don’t hesitate to call and ask me any questions you might have. This process is all about you and your needs. Real Estate is a big investment and I understand that. One thing you will get with me is a personal relationship, In the end, that goes a long way.

My area is a great place to live! For more information, please give me a ring or email me today. I would love the opportunity to earn your business and partner with you in regards to your Real Estate needs.

Rick Frissell aka "The Red Baron fo Real Estate"

813-340-6828

RedBaronRealEstate.com

Why You Shouldn't FSBO

Visit us for more information at:  Red Baron Real Estate

When a House Becomes a Happy Home

When a House Becomes a Happy Home

When a House Becomes a Happy Home. We talk a lot about why it makes financial sense to buy a home, but more often than not we’re drawn to the emotional reasons for homeownership.

No matter the size or shape of a living space, the feeling of a home means different things to different people. Whether it’s a certain scent or a favorite chair, the feel-good connections to our own homes are typically more important to us than the financial ones. Here are some of the reasons why

1. Owning your home offers stability to start and raise a family

From the best neighborhoods to the top school districts, even those without children at the time of purchase may have this in the back of their minds as a major reason for choosing the location of the home they purchase.

2. There’s no place like home

Owning your own home offers not only safety and security, but also a comfortable place where you can simply relax and kick-back after a long day. Sometimes, that’s just what we need to feel re-charged and truly content.

3. You have more space for you and your family

Whether your family is expanding, an older family member is moving in, or you need to have a large backyard for your pets, you can take all this into consideration when buying your dream home, so the space truly works for you.

4. You have control over renovations, updates, and style

Looking to actually try one of those complicated wall treatments you saw on Pinterest? Tired of paying an additional pet deposit for your apartment building? Maybe you want to finally adopt that fur-baby puppy or kitten you’ve been hoping for. Who’s to say you can’t do all of these things in your own home?

Bottom Line

Whether you’re a first-time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a happy home.

Try our website for full information, reports and blogs:  Red Baron Real Estate

If you’re ready to put your housing costs to work for you, maybe it’s time to become a homeowner. Let’s connect to determine if moving from renting to buying is right for you.

Visit our website:  RedBaronRealEstate.com