SAN FRANCISCO, June 16, 2020 /PRNewswire/ -- New research published today by home co-investing company Unison proposes a new way of understanding the economic impact of the pandemic and the long-term effect it will have on home prices in select U.S. cities.
"Resilient" industrial sectors where businesses have been able to maintain productivity during the pandemic and adapt to the market environment (such as financial services and information technology) have enjoyed a higher level of job stability, while "vulnerable" industrial sectors like retail, manufacturing and hospitality have experienced much more severe levels of job loss. Based on historical analysis, cities with high concentrations of vulnerable job sectors will experience slower recoveries in housing prices, according to Unison's report.
"Historically, cities with high concentrations of jobs in resilient industrial sectors experience the quickest recovery in housing prices," said Unison VP of Research Brodie Gay. "Furthermore, as a result of shelter in place ordinances, the home has become a center for commercial and retail activity. Working and shopping from home are the new norm. Real estate capital is beginning a secular rotation out of undiversified retail and commercial spaces like malls and large office buildings. Investing in diversified residential real estate, with a tilt towards resilient cities, will provide institutional investors better, more balanced exposure to the U.S. economy."
The report shows that based on previous recessions, increases in unemployment generally correlate with drops in home prices, and the two factors are geographically linked. For example, during the Global Financial Crisis of 2007-08, Las Vegas, NV experienced a 10% rise in unemployment rate alongside a 62% drop in housing prices, whereas Dallas, TX's numbers were far less severe with a 4% increase in the unemployment rate and a 10% drop in housing prices. Cities that have high proportions of jobs in vulnerable sectors have also seen huge unemployment spikes during COVID-19, meaning Las Vegas and other cities like it will likely experience similar drops in housing prices again. Furthermore, cities that depend on these at-risk industries will likely experience slower job recoveries and more challenging housing markets.
Unison's research ranked the 20 top cities from the S&P CoreLogic Case-Shiller 20-City Index in order of anticipated resiliency (from most resilient to least resilient): Boston, Washington D.C., New York, San Francisco, Atlanta, Minneapolis, Chicago, Cleveland, Tampa, Charlotte, Denver, Dallas, Phoenix, Los Angeles, Seattle, Portland, San Diego, Detroit, Miami and Las Vegas.
Select vulnerable cities outlined in Unison's report include:
Select resilient cities outlined in Unison's report include:
"Job resilience is one of the key drivers of housing demand in both the short and long-term," said Unison CEO Thomas Sponholtz. "The ownership-occupied residential real estate portfolios we construct for institutional investors are geographically diversified across markets with a limited supply of new housing units and strong demand due to high concentrations of jobs in resilient industry sectors."
Read the full Unison: Resilient and Vulnerable Cities report here.
Unison is a San Francisco-based company that is pioneering a smarter, better way to own your home. Until now, the only way to finance a home was by taking on debt. Through home co-investments, we help homeowners access their equity flexibly with no monthly payments or interest. We enhance home affordability, reduce debt, and deliver a less risky way for homeowners, investors, and society to think about their most important asset - the home. For additional information, visit www.unison.com or follow us on Facebook, Instagram, LinkedIn, Twitter and YouTube.
About Unison Investment Management
Unison Investment Management is the market leader and pioneer in home co-investing, with $817 million in assets under management. Over the last 14 years we have invested in more than 7,500 homes at the equity level across metropolitan and suburban areas that have strong housing demand and limited housing supply. Unison provides institutional investors efficient, diversified access to the world's largest asset class - owner-occupied residential real estate - while providing low correlation to traditional asset classes. We also enhance home affordability, enable retirement, reduce debt, and deliver a smarter and safer allocation of housing exposure for homeowners and investors.
Unison Investment Management serves as the asset management arm of Unison. For more information, visit unisonim.com
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