Back in March, National Association of REALTORS® Chief Economist Lawrence Yun said, “I am optimistic that the (CARES Act) stimulus package will lessen the economic damage, and we may get a V-shaped robust recovery later in the year.”
Economists often describe trends by shapes, such as V (steep decline, strong recovery), U (wider, less defined trough), W (double decline and recovery) and L (steep decline, flat line).
Ali Wolf, chief economist at Meyers Research, shared the graph below during a recent webinar. It shows that mortgage purchase loan applications had rebounded almost 10 percent higher than 2019 levels. “That is the epitomy of a v-shaped recovery,” she said.
Wolf cited several reasons as to why housing has been following a v-shaped recovery:
- 50% of job losses below ‘normal’ new homebuyer income levels
- Lack of resale inventory
- Seriously low mortgage rates
- Pent-up demand
Financial blogger Logan Mohtashami put it this way, “It’s not a coincidence that the ‘V-shaped’ recovery in purchase applications is mimicked by the inverted ‘V-shaped’ recovery of the St. Louis Stress Index (a financial metric for stock and bond markets).” Under normal financial conditions, the stress index is zero.
Phoenix is headed in the right direction
Tim Sullivan, senior managing principal at Meyers Research, calls the Phoenix market one of his “Comeback Kids” — holding its own despite COVID-19 and a New Home Pending Sales Index (PSI) that was -29% YOY. He says we are rebounding nicely with a Total Net Migration of 1.6%, New Home Market Share of 15% and Average Builder Incentive of $6,500.
PSI aside, Phoenix looks to be in good shape for a faster housing recovery.
Related stories:
Weekly Housing Market Monitor Shows V-Shaped Housing Recovery
Survey: Pandemic Has Made Americans More Eager to Buy
Top 10 Markets for Millennial Buyers During the Pandemic