Mortgage in America

It’s Just The Facts: May 2020

  1. A DISINCENTIVE TO GO BACK TO WORK – An estimated 65%-75% of out-of-work Americans who are receiving unemployment benefits are being paid more money per week than they were receiving pre-pandemic from their employment (source: J.P. Morgan “Eye on the Market”).
  2. UP BUT STILL WAY DOWN – During April 2019, an average of 2.34 million passengers were screened each day by the TSA at airports across the US. Air passenger travel deceased quickly following President Trump’s declaration of a national emergency on 3/13/20. The low point for air travelers was just 87,534 flyers on 4/14/20, off 96% from the April 2019 daily average.  As states have hit the “reboot button,” airline passenger traffic has inched upward, reaching 318,449 last Thursday 5/21/20 (source: Transportation Security Administration).
  3. A JACKSON A DAY – Retail sales in the USA in April 2020 were $403.9 billion, down 16.4% or $79.5 billion from just a month earlier. The monthly decline is equal to every US household (124.4 million) spending $21 less per day during April than the dollar amount they spent per day in March (source: Commerce Department).
  4. FEWER FOR SALE – There were 1.47 million homes for sale in the USA at the end of April 2020, down 20% from the 1.83 million homes for sale in April 2019 and down 34% from the 2.22 million homes for sale 5 years ago in April 2015 (source: National Association of Realtors).
  5. HALF A YEAR – The shortest US recession in the last 100 years was the 6-month economic downturn that ran from January 1980 to July 1980 (source: National Bureau of Economic Research).
  6. HOW LONG CAN YOU LAST? – 52% of 375 small businesses owners (with 2 to 500 employees) interviewed in mid-April 2020 fear they would be out-of-business in 6 months or less if the societal restrictions imposed nationwide due to COVID-19 continued for 6 more months (source: Society for Human Resource: Management).
  7. BIGGEST YET – The House released the $3 trillion, 1,815-page HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions Act) on 5/12/20. Congress has previously passed 4 bills between 3/06/20 and 4/24/20 to counter the economic impact of the COVID-19 pandemic (source: House of Representatives).
  8. DID THEY PAY? – Of the 124 million households in the United States as of 3/31/20, 81 million (65%) are homeowners. Of the 81 million, 50 million have a mortgage on their primary residence. The May 1st mortgage payment for those 50 million homeowners was due last Friday 5/15/20 (source: Census Bureau).
  9. SOCIAL DISTANCING ALREADY – 35 million Americans live alone, i.e., 28% of the households in the United States have just a single person living in the house/apartment (source: Census Bureau).
  10. NOT INFLATION, BUT DEFLATION – The Consumer Price Index (CPI) fell 0.8% on a month-over-month basis in April 2020, its largest monthly decline since December 2008. The last calendar year in which inflation was negative, i.e., deflation, was 1954 or 66 years ago (source: Bureau of Labor Statistics).
  11. HELP FOR BORROWERS – Pandemic-impacted homeowners who have mortgages that are owned by Fannie Mae have access to a “forbearance plan” that allows them to reduce or suspend their monthly mortgage payment for up to 12 months. Homeowners are allowed to establish a repayment plan to catch up gradually or modify the entire loan but are not required to make a lump-sum payment at the end of 12 months. Homeowners need to contact their mortgage servicer to determine if they qualify (source: Fannie Mae).
  12. SO MANY WITHOUT WORK – As of the end of April 2020, the state of California was paying $1 billion a day in unemployment benefits (source: California Labor Secretary Julie Su).
  13. WOW – As of 2/29/20, the USA had a jobless rate of 3.5% with 5.8 million out-of-work Americans. As of 4/30/20, our jobless rate was 14.7% with 23.1 million out-of-work Americans (source: Department of Labor).
  14. NEVER THIS CHEAP – The average interest rate on a 30-year fixed rate mortgage was 3.23% as of 4/30/20, a record low for a statistic that has been tracked since 1991 (source: Freddie Mac)
  15. COULD THIS HOUSING TREND REVERSE? – In the 3 years through 3/31/20, the number of US households (both owners and renters) has increased by +5.5 million to 124.4 million. The number of owner households has increased by +5.6 million to 81.3 million while the number of renter households has declined by 0.1 million to 43.1 million (source: Census Bureau).
  16. STAYING HOME – 17% of 487 high school seniors interviewed in mid-March 2020 will “definitely” or “most likely” change their plans to attend a 4-year college in the fall of 2020 (source: Art & Science Group, LLC).

Courtesy of Mortgage Market Guide