I know a couple who are moving from one city to another. If housing prices collapse it’ll be a mixed blessing.
They’ll have trouble selling their old house, but the new house in a new state will be cheaper. I’m guessing they can rent their old house until things recover if they need to.
Will this lead to a real estate collapse like what happened in 2008? Anyone have any idea yet on what could happen?
My total WAG is that housing prices will fall due to an increase in homes available on the market.
People are losing their jobs left and right. Foreclosures will increase just like they did in 2008. A nephew of mine just lost his job and he and his wife live in a 5th wheel that they’re making payments on. He was fired so his unemployment was denied. They aren’t paying a mortgage but its the same idea.
Another nephew and his wife work at local casino and they are signing papers to buy a house this week. They both just got laid off.
My wife lost her job last Friday. They fired her so she can’t collect unemployment. (Notice a trend here?) As long as I continue to work we’ll be ok, but this whole situation has grown exponentially bad in a very short amount of time.
The housing market will, I’m sure, take a big hit.
I wonder if thats going to be an issue, employers firing people rather than laying them off. Do the employers save money doing that?
Around here several offers for a house evaporated since the money for the down payment was supposed to come from selling stocks. That’s what assuming the market will always go up will do for you.
A house near me got flipped - new roof, new lawn, I don’t know what they did outside. On the market now - we’ll see if there is any action.
At the least the number of offers will go down while people wait to see what happens. And I wonder how realtors rate on the critical services list.
You don’t get unemployment if you are fired. I guess I might be persuaded that you shouldn’t get it if fired for cause, but not if fired for covid-19. Where do you live and what good is the unemployment in your jurisdiction? Its purpose is supposedly to keep you alive while you search for a job, isn’t it? Least that’s what is around here.
In my opinion, it may be a little early to determine the effect this will have on real estate. In markets like Las Vegas, I have seen the median prices hitting records recently. The longer we stay indoors, the more of an effect it will have on the economy - and then ultimately real estate. Let’s all hope for good news and a quick resolution.
Employers in many states can see their tax rate to cover unemployment benefits increase as a result of claims by their workers. (Cite)
Now just because you fire someone permanently does not mean they are not eligible for unemployment benefits. If you were not fired for cause you are still eligible. When the GM plant I once supported shut down for two weeks in the summer it was just a temporary lay off. If they had shut the plant permanently or permanently cut their workforce their workers would still have qualified for unemployment. When I fired one of my warehouse workers for no call/no show for two straight weeks he was not eligible. He tried to file. My boss sent along the documentation for why he was fired when we disputed the claim. No unemployment checks were issued.
Now an employer could try to gin up some cause but it seems pretty stupid. Hiring and training new employees costs money. Labor markets were tight before the pandemic raising the costs of hiring. Most people will presumably go back to their existing jobs unless things go very badly. Setting yourself up for being short staffed for the start of what could be a pretty quick recovery seems like it would cost more than the higher unemployment taxes for a couple years. Some businesses are stupid.
It is worth it for anyone who at all questions the firing to file and fight it through the provided processes. Maybe the misunderstood the firing. Maybe the employer misrepresented it to try and save money. Maybe the employer is too stupid to win the dispute.
In the experience of both my nephew and my wife, they were fired “for cause.” Bullshit, made-up causes. But still for cause. Which means that when they file for UI it will be contested and in my experience employers almost always win. It’s a he said / said situation and employees never admit to fucking up so the default seems to be judgement for the ex-employee.
My wife didnt even try to file. My nephew did and is awaiting a hearing, 3 weeks later.
It’s a fucked up system. And yes, I fully expect employers to fire people rather than lay them off. As DinoR noted, firing an employee vs. laying them off can – and will, if the employer doesnt do it to their entire workforce – save them money.
In the case of my nephew he had several years on the job (he was a welder / fabricator). If he’s replaced they can replace him with someone who’s starting wage is much lower.
Same with my wife. She’s a college-educated pre-school teacher but was working at a private daycare center that does not require their employees to have a college degree. So after 3 1/2 years of faithful, deficiency-free service she was terminated. Her replacement can be some high school dropout with no diploma or training of any kind, willing to work for minimum wage.
It’s a clear and blatant cost-saving measure on the part of both employers.
And ultimately this will have more than a trickle-down effect on the housing market. Around here, Southern rural Oregon, it’ll be a fucking tsunami. I fully expect there to be a huge glut of foreclosures hitting the market in 6-12 months unless this stimulus package puts money directly into the hands of those who have lost their jobs – via all means – and the pandemic burn out quickly.
I am not holding my breath for either.
I JUST read an article on this very topic! The housing market in most locations is expected to take a major hit. Construction of new homes has ground to a halt in many areas due to closures, which affect the supply chain and laborers. Also, uncertainty makes people reluctant to make major purchases, low interest rates or not. And, of course, with layoffs and forced closures, many people just can’t afford to buy.
We bought a new house three weeks ago and are/were planning to sell our existing one in about a month after we move. So, I guess I’m gonna find out.
Seems likely that I have picked the actual worst 2-month span in my lifetime to be long housing. So it goes.
The S&P 500 is 21% lower than it was 5 weeks ago. A large real estate investment trust is off 31%.
I believe you are incorrect about this, but I don’t have a cite. I thought you don’t get unemployment, or you have to wait a lot longer for it, if you quit voluntarily, but if you are involuntarily separated from your job for any reason, you can apply for and get unemployment quite quickly. I think the philosophy of that from the state’s point of view is that you shouldn’t quit a perfectly good job and expect the state to support you right away, because that would encourage frivolous quitting and laying about until the unemployment runs out. Also, since employer taxes pay for unemployment, it would be an unfair burden on the employer if someone quit and went on unemployment right away.
Perhaps this differs by state? My familiarity is with Oregon and California.
We are in Oregon. If the termination was for “misconduct,” as defined by the employer, unemployment will be denied.
If you are “involuntarily separated from your job” because - from the employer’s standpoint - you royally fucked up (for ex. stole, harassed customers or other employees, took drugs at work, shit like that) then no, you do not get unemployment compensation.
I don’t know about other states, but in NJ someone out on disability (which a COVID19 absence could be) is probably safe. I had one employee out on medical leave during a layoff - he was immune from it.
My sister is buying a house in the UK. The finances are all in place, but nothing can go forward until the “non-essential” inspectors have done their work. Who know how long that will be.
Uncertainty will surely foul up the market.
I wonder what it will all be like when we are past this. It will be very difficult to get services, because everyone who has been waiting through this will want things done ASAP when we are free to do commerce. How long will we have to wait to get haircuts? Blech.
Yes. In most states, if a company fires someone for cause it won’t have any impact on any unemployment they pay. However, an employee can still file for unemployment and challenge the company’s assertion that termination was for cause and very often receive a satisfactory answer.
I don’t expect that in the US you will see a housing price decline in general. You may begin to see the number of days houses are on the market lengthen, and you may see the rate of appreciation slow. You may also begin to see housing prices in certain segments in various regions ($50k - $100k in a particular location) see some declines. But I do not expect the overall market to decline like what was seen in 2008-2009.