September 10, 2020
New data from the second quarter of 2020 show that the average home price was up 4 percent in the past year, the lowest increase since 2013. Prices were already slowing before the pandemic, so this isn’t a surprise, but it’s now pretty sure that the slowing will continue for several years. The good news is that there probably won’t be a crash.
As always, individual markets vary a lot. Home prices increased 10 percent in Boise, 7 percent in Phoenix, 6 percent in Tampa, but just 3 percent in Dallas and 2 percent in Chicago. Prices were down 3 percent in San Francisco.
The second quarter data only show a bit of pandemic influence, the real effect won’t be felt until next year, when we may see more forced sales as people’s financial options run out.
The job data for August show monthly improvement but at a slower rate. Compared to last year, jobs were down 7 percent – not much better than the 7.7 percent of July. The slowing improvement is a strong suggestion that big job problems will persist for several years. After the 2008 recession, when “only” 5 percent of jobs were lost, it took seven years to get back to the pre-recession level of employment. It won’t take as long this time, but a quick recovery won’t happen either.
Compared to last year, jobs in August were down 6 percent in manufacturing, 4 percent in retail, 1 percent in finance, 6 percent in business services, 3 percent in healthcare, 19 percent at restaurants and 4 percent in government.