Mobile Home Prices Will Be Fine After COVID-19, Right?
This seems to be a question that no one truly has an answer for, but I will do my best to give you several perspectives over the coming weeks. Including, how record-high unemployment, growing debt, concerns over a recovery, how long before our lives return to normal? and how it will likely impact we buy mobile homes prices in 2020 and beyond?. Mobile Home Prices Will Be Fine After COVID-19, Right?
This week I will focus primarily on Unemployment, Stimulus, and a comparison of the Great Recession. How many of you remember the hardships of the Great Recession? My wife and I, both do and it was incredibly hard to find a job because of all the economic uncertainty. If you live in the United States, then you should know that our economy is based on capitalism. Capitalism means that corporations are privately owned and the operations are funded by profits. How are these profits made, you may ask? Profits are made when we the consumers spend money.
During the Great Recession, a lot of consumers had no money to spend, which meant that businesses had no way of paying employees. Employees were then laid off or had reduced hours. It became a downward spiral as fewer people began to spend hours continued to be reduced and businesses began to layoff employees. Unemployment surged to the highest numbers in years and peaked at 10%. The government had to bail out homeowners, banks, and various businesses, just to keep the economy afloat. The Economic stimulus package in 2008 ($152 billion) and the American Recovery and Reinvestment Act in 2009 ($831 billion) total to a little under $1 trillion.
Is this starting to feel like deja vu? It might or at least it should, but keep in mind there has already been $2 trillion, injected into the economy for various businesses and unemployment. Thats already more than double the Great Recession. That number also doesnt include the 2nd set of small business loans approved last week because the first wasnt enough and it is very likely that money will be gone just as fast as the first time. To make matters worse unemployment is at a record high. According to BLS.gov (bureau of labor statistics), there are over 26 million people unemployed and that doesnt count those who cant sign up because the systems arent able to process the high volume of unemployed. There are roughly 165 million active participants in the workforce, which means our unemployment would currently be 15%. That means unemployment is 50% higher than it was during the Great Recession.
So what does this mean for you? Well, there are some key differences between the Great Recession and now. Overleveraged banks, insurance companies, and toxic real estate assets in part to credit default swaps and bad lending practices. The last downtown in 2008 was caused in part because of real estate, which led to a decline in mobile home prices over the following years (2012 was the bottom). This downturn may not be due to real estate, but that does not mean real estate wont be impacted.
The worst impacts of the coronavirus may still be yet to come. The United States now has over 1 million cases recorded, more than the next 5 countries combined. Scientists are also worried about a 2nd or possible 3rd wave of the virus, which could coincide with the flu season and make things worse. I have talked to several business owners who are equally worried about a slow bleed when the economy opens back up. Most stated that a change in consumer habits could lead to less spending and that would mean a reduction of staff or closing their business. Fewer companies, less work, fewer jobs, and no money means there will likely be fewer people looking for homes at the price point you want. Keep in mind with real estate the prices always go up faster than they come down. As I pointed out earlier the peak of the recession was 2008-2009, but the bottom of the real estate crash wasnt until 2012. If you are looking to sell or you’re in an unfavorable situation, now may be the time.
Contact one of our investors and see how you can start selling your mobile home.