An Economy Safe as Houses
It’s a squeeze out there. The National Multifamily Housing Council claims a third of all leaseholders and lodgers didn’t make the rent in April. That’s over sixteen million apartments falling into arrears!
Weekly spikes in unemployment (3.3 million new claims last week and 6.6 million this week) have sent shockwaves through markets, but investors have stood firm. Indices are flying back despite exponential corona cases, and economists are being proved wrong with every session. This rally might not be a dead cat bounce after-all!
The Federal Reserve’s “unlimited” stimulus and a $2.2 billion bailout package from the White House might have put a limit under a market bottom, higher than stocks trade at currently. You’d need a big calculator to work this out to the nth degree, but it’s stories from the property market that reveal what numbers on a screen can really mean.
To be playing catch-up with mortgages and leases so soon after redundancy, possibly even facing eviction or refinancing, shows how many Americans have been left behind, living paycheck to paycheck for God knows how long. These are the same Americans investors expect out and about when quarantine is lifted, consuming and producing to restart the fundamental economy.
It’s up to local states to protect folk from eviction. If arrears snowball, new federal laws could be in the pipeline. The last thing markets need now is a repeat of 2008’s housing crisis. Countless mortgages could completely default, and investments backed by those mortgages could get wiped out as well. Keep an eye on these statistics!