November 13, 2020

It looks like the economy is getting better but the recession will still be with us well into 2021. The good news that covid vaccines may be highly effective means that we can see an end to the pandemic within the next two years and a return to ‘normal’ economic growth; that’s good for real estate values. On the other hand, most Americans won’t be vaccinated until 2022 and in the meantime the virus will continue to rage, producing a period of uncertainty; that’s bad for real estate values.

On top of the pandemic dynamics, the slowing rate at which jobs are coming back suggests very strongly that many jobs will be gone for good. In August the loss of jobs compared to last year was 6.9 percent, in September it was 6.4 percent, in October it was 6.0 percent; still getting better but we’re probably seeing a restructuring of how businesses will operate in the future.

Many people will need to find a new job and that means they will move; from where and to where is as yet unknown. This means good opportunities for real estate investors but also greater risks.

The overall 6.0 percent loss of jobs in October included losses of 4.6 percent in manufacturing, 3.0 percent in retail, 0.9 percent in finance, 4.8 percent in business services, 2.8 percent in healthcare, 15.9 percent at restaurants, and 4.7 percent in government.

The losses in government are worrying; they were 3.2 percent in August, 3.7 percent in September, now 4.7 percent. If we see worse figures again for November it will mean that tighter budgets are already leading to permanent job cuts.

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