Will Lower Unemployment Benefits Impact the Housing Market?

The housing market’s recovery from the pandemic felt like a miracle, but it’s not over yet. Skyrocketing COVID-19 cases may lead to another shutdown, resulting in more unemployed Americans right at the time Congress has set additional unemployment benefits to expire. Boosted unemployment benefits have helped the economy tremendously, as those receiving bonus benefits increased spending by about 10%, according to Realtor.com. Most experts told the site that there will be fallout, but nothing as dramatic as before. In the summertime, the housing market stands a chance, but things will naturally slow down later into the year, says one economist. 

This likely won't be the last time the government is called on to step in. Another wave of foreclosures could deal the housing market a blow, knocking down prices and making families homeless. But that wouldn't materialize until at least next year, after the maximum 12 months of mortgage forbearance runs out for homeowners with government-backed loans. The hope is by that time, laid-off homeowners will have returned to work and can make their payments or the federal government offers additional assistance.

"Will there be some fallout? Of course," says Matthew Gardner, chief economist of Windermere Real Estate. "But I don't think it will be enough to cause [housing] prices to drop.”

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