Economic impact of the COVID-19 pandemic
The COVID-19 pandemic has had an enormous impact on the US economy. After a record breaking 10 years and 8 months growth cycle, the US entered a recession in February 2020 due to the restrictions caused by the pandemic.
In the second quarter of 2020 the GDP declined by 33 percent and personal expenditures dropped 35 percent. And, the US lost 22 million jobs in March/April of this year. In May/June 7.5 million of these lost jobs were regained.
The effect of the pandemic has been similar for the Colorado economy. In just the months of March/April, Colorado lost 342,000 jobs. In May/June 126,000 of these jobs were added back into the work force. However, employment remained 217,000 jobs below that of January 2020.
A total job loss of 128,000 is forecast by the University of Colorado by the end of 2020. The state will have lost 4.5 percent of all jobs by then.
At the end of June 2020 unemployment was 10 percent. Unemployment surpassed the worst weeks of the Great Recession for 19 straight weeks. An additional 7800 new unemployment claims were added in July.
At the end of June, Fort Collins had the lowest unemployment in Colorado at 9.2 percent. Boulder’s unemployment rate was 9.5 percent. The highest unemployment rate was in the Denver-Aurora-Lakewood area at 11 percent.
By June the net population growth of Colorado slowed to 43,000. This includes a natural growth rate of 23,000 with births out pacing deaths, for a net influx of people from out of state of 21,000.
All industries have been affected drastically by the pandemic.
In the Accommodation and Food Service industries 45 percent (130,000) jobs were lost in March/ April. When the economy reopenedin May/June 60,00 of these jobs were regained.
The Health Care and Social Assistance industries were also hit hard by the pandemic with a loss of 45,000 jobs (15 percent) in March/ April. In May/June 20,000 jobs were regained in these areas.
Because of social distancing requirements, the Arts and Entertainment industries lost over 30,000 jobs (55 percent) of their work force in March/April. Forty percent (12,000) of these jobs were recovered in May/June.
The Real Estate Sales, Rental and Leasing industries were also hard hit by the pandemic with a loss of 8,000 (12 percent) jobs. Less than 1000 of these jobs were regained in May/ June.
Residential Construction lost 4,000 jobs (3.4 percent) by the end of June. There was a slight drop in building permits (1.5 percent), 285 units less than in 2019. There are a total of 19,270 building permits in 2020 so far. Single family home permits increased 9 percent while multi- family permits fell by 18 percent.
People continue to move to Colorado, but at a slower rate than in 2019. In 2019, 45,000 people moved to Colorado. It is forecast only 30,000 will move here in 2020 with a drop to 20,000 new residents in 2021.
In summary, the COVID 19 pandemic has had a devastating effect on the US and Colorado economies.
The U.S. lost 22 million jobs with Colorado losing 342,000 Colorado is expected to rebound to a net loss of 128,000 jobs by the end of 2020.
Colorado unemployment rose to 10 percent and is forecast to be at 4.5 percent by the end of 2020 Real estate sales in Colorado have varied dramatically since the beginning of the pandemic with a huge decrease in single family homes for sale in April and May and a dramatic increase in sales in July and August. At the same time inventory of SFR homes for sale is down tremendously from March through August.
Above is a chart of closed sales and inventory of Single Family Dwellings from March 2020 through August 2020 in comparison to those of March 2019 through August 2019 taken from the IRES multiple listing service.
Between the huge decline in inventory of homes for sale from March through August and the pent-up demand of buyers who put off purchasing homes in April and May, now is a great time to list your home.
BY MARY HILL
The Hill Group, Coldwell Banker Realty