WINCHESTER — Job growth and the real estate market go hand-in-hand, even during a pandemic, according to a national real estate professional.
Dr. Lawrence Yun, chief economist for the National Association of Realtors, spoke on a variety of real estate topics during this year’s virtual Shenandoah Valley Real Estate Market and Economic Forecast presentation. Chief among his talking points was how job growth impacts both commercial and residential markets.
Yun said the United States had seen 10 straight years of job growth prior to March. He called it the “longest economic expansion ever.”
Then COVID-19 hit.
“In the month of April, we lost all of that. Ten years of job creation gone in a single month,” he said.
But as states began opening things back up, jobs began to come back. Yun said the U.S. still needs to add about 10 million jobs to “get back to normal.”
The more jobs, the more need for homes, Yun said, adding that there’s better job growth in the Shenandoah Valley right now than in most places in the country, which has led to businesses opening up and houses being sold at a faster-than-normal pace.
Area economic development leaders acknowledged that our region is certainly feeling the impacts of COVID-19 but there have been plenty of positives to come out of the pandemic.
“What we’ve seen is some good resiliency,” Winchester’s Development Services Director Shawn Hershberger said during the presentation. “We’ve seen some closures, some vacancies created, but we’ve seen some places haven’t stayed vacant long and new occupants are coming to all of our retail centers.”
In terms of commercial real estate, Front Royal-Warren County EDA Executive Chair Jeff Browne said promoting things such as quality of life for a company’s workers, the “natural social distancing” the Shenandoah Valley provides and the impact that the Inland Port can have on business is a good strategy for bringing companies to the area.
The region should be focused on attracting targeted industries, building partnerships that work toward solutions for workforce needs and continuing to work with property owners to make sites ready for clients, said Patrick Barker, executive director of the Frederick County EDA.
Add in the fact that the number of remote workers continues to grow, and you’ve got a recipe for a successful housing market, he said.
“Many people are moving here because they need to be close to the D.C. area,” Yun said. “Perhaps people do not need to go to downtown D.C. every single day, even after the pandemic. If that’s the case, why do you need to have an expensive home (close to D.C.) when you could have a more affordable home in the Winchester or Front Royal region then commute?”
Yun said the number of new homes being built, the number of pending contracts and the volume of mortgage applications are all high even though inventory is low and new homes are taking longer to finish because of rising lumber costs and the lack of skilled workers.
Still, the number of pending contacts indicate the typically slow winter months could see a boom in finalized closings on homes.
While it may seem like many people are spending money on homes, Yun said most Americans right now are actually saving the money they’ve received from federal stimulus checks or unemployment. That, he said, could come to an end once a vaccine for COVID-19 is released.
“People are very cautious. So all of this extra money, people are saving it up. Once a vaccine is available, there could be some unleashing of spending back into the economy,” he said. “Families are struggling, but in the aggregate Americans are saving and waiting to put money back into the economy.”
Buyers, Yun said, will likely want to take advantage of the all-time low mortgage rates, which could make 2021 a near-record year in the real estate market.
“People are lined up,” he said. “Ready to hit the market.”