In this Real Estate News Brief for the week ending June 6th, 2020… a pleasant surprise about job growth, a forbearance slowdown, and home design that discourages germs.
We begin with economic news from this past week and a surprise report on the job market that sent the stock market soaring. The government’s job growth report shows a 2.5 million hiring increase for the month of May. (1) That brought the unemployment rate down to 13.3% from a high of almost 15%, because of the pandemic.
A day before that report came out, the weekly unemployment report shows another 1.8 million people filed for benefits. The rate of claims has been slowing down, however. The current number of people who are not employed is 19.3 million.
Moody’s Analytics chief economist Mark Zandi reacted to the positive news about jobs, saying, “The COVID-19 recession is over, barring a second wave of infections or policy error.” He says, “It was the shortest recession in history and among the most severe. But recovery will be a slog until there is a vaccine.” (2)
New York Federal Reserve bank president, John Williams, is also predicting that the economy has either hit bottom or will during this coming month, and will rebound during the second half of the year. He says the forecast also shows a lot of uncertainty associated with the recovery. (3)
The economic fallout of the pandemic comes with a steep price. The Congressional Budget Office is now estimating that the coronavirus will cost the U.S. economy $7.9 trillion. That reduces the GDP by about 3% through the year 2030.
Mortgage rates remain low but they did inch up a few basis points. Freddie Mac says the average 30-year fixed-rate mortgage was three basis points higher last week, to 3.18%. That low rate will help what is now expected to be hot summer sales season.
In other news making headlines…
Mortgage Forbearance Slowdown
The number of homeowners requesting forbearance has slowed to a trickle. Mortgage data firm Black Knight says that 7,000 borrowers requested forbearance last week, but the number of people in forbearance plans fell for the first time since the pandemic began. (4) About 4.8 million loans are on pause right now. That’s about 8.9% of all home loans.
Black Knight CEO Anthony Jabbour says, “There were a net 34,000 fewer homeowners in forbearance as of June 2. The decline was actually greater among government-backed mortgages, which saw 43,000 fewer total forbearance plans than last week, but this was partially offset by an increase of 9,000 new plans on mortgages held in bank portfolios and private-label securities.”
Lender Removes Extra Rule
The job loss tsunami caused by the coronavirus prompted additional employment verification among lenders, but United Wholesale Mortgage says it has removed that extra step. Under the rule, a borrower’s job status had to be re-verified on the day that the sale was closing. The company doesn’t see a need for it at this point. (5)
According to Labor Department data, job losses have been slowing down for the last eight weeks. There are also new signs that companies are hiring or re-hiring, including the latest employment report.
There’s been a surge of big bankruptcies this last month. Bloomberg News reports that 27 companies with at least $50 million in liabilities filed for bankruptcy. That’s the highest number since May of 2009, when 29 big companies filed for bankruptcy.
Several recognizable names are retailers including JCPenney, J.Crew, Neiman Marcus, and Tuesday Morning. Gold’s Gym and Hertz are also on that list.
Most Popular Home Design Features
Preventing germs has become a priority for many people, and the people who design new homes are keeping that in mind. Architect Bea Spolidoro told Forbes that the residential real estate industry can learn a lot from hospitals and commercial kitchens. She says that residential kitchens can be designed with smoother, flatter surfaces that are easy to clean. Reducing seams, cracks, and complicated high-touch areas will also help. She recommends steel, quartz, or Corian because they are not porous. Granite and other natural stone countertops can accumulate germs.
She also recommends good ventilation for the home. Air purifiers can help catch or kill germs, while air quality monitors can help you track problems. If you have them inside and outside the home, the one outside can let you know if it’s healthier to keep the windows open or closed.
(2) CNBC Article
(3) NewsMax Article