Mini Housing Boom in July Stands as Hopeful Indicator
Life in America has been more than a little stressful in 2020. Even if one were to magically take away all of the protests and riots that erupted over systemic injustice in American policing, and even if one happened to forget all about the political polarization of our elected officials making a mockery out of American democracy, there’s still the novel Coronavirus, known as Covid-19 to deal with. 2020 has been one for the record books, to be sure, and it’s not over yet. Though through everything Americans have suffered here, particularly in the realm of housing, there is a glimmer of hope, at least if America is willing to adopt some policies from our foreign allies.
There could be a silver lining for America, if the nation can manage to follow some steps laid out by the UK. The United Kingdom, consisting of Great Britain, Scotland and Northern Ireland, was suffering per capita every bit as much as the USA, though their July housing report numbers are something that Americans can also see as a sign of hope. According to Halifax, the month of July was a boom period in the housing market for the UK.
Housing is a very fickle market. As most people can recall, the financial collapse of 2008 was brought on almost entirely by the housing market. Giving subprime mortgages to people who couldn’t afford mortgages, and then having greedy brokerages playing roulette with people’s lives, caused a series of cascading failures that almost sent the entire globe back to the Great Depression.
So, what did the UK do that was so special with their housing market? The answer here isn’t difficult to figure out. The main reason that the UK saw a 1.6% month-on-month increase in housing prices, the biggest rise in years, is that they managed to flatten their virus curve. By sheltering in place and observing mask regulations and social distancing, most of the UK was able to stamp out the rising ride of the Coronavirus, and thus they were able to open up a lot more of their economy. After that, the British people did what they do best and just lived their lives as productive citizens, and this alone was enough to really spur their housing market.
It might seem a little bit counter-intuitive, but the success of the housing market is driven almost entirely by how much houses are able to sell for. Sure, it limits the number of people who can afford a home, and it puts an even larger burden on people who live below the poverty line. But as an economic engine, the housing market is driven entirely by how much owners and developers can charge for their homes. They’re the ones making the most money and thus the ones putting the most money into the overall economy. So when the housing market thrives, there’s a lot more money in circulation to stimulate the economy. Compared to July of 2019, housing prices in the UK were an average of 3.8% higher.
Lessons America Can Take Away
How does any of this UK news relate to America? For much of the rest of the globe, other nations do well or poorly based on how America is doing. The US Dollar has a lot of global strength, and America is such a huge part of supply and demand and overall economics that one nation is able to drive the globe in many ways. Again, look back to 2008 and remember how America’s collapse affected the entire planet. So America’s housing market needs to start doing better, or the rest of the world might suffer.
One thing America can borrow from the UK is their series of policies that helped to flatten the virus curve. America opened up a bit early, and now dozens of states are reporting a huge spike in Covid-19 cases, which is causing businesses to shut down once again, and it’s affecting the housing market with millions more people who will not buy or sell, either because they cannot or simply do not want to.
So America would do very well to look at how the UK flattened the curve, and pretty quickly. They didn’t sacrifice their sheltering for beach parties and barbeques. They didn’t push rumors that the virus was a hoax and ultimately ignored social distancing. They took it seriously, they stayed in place, and they weathered the storm, and now their economy is doing well. America revolted against the British centuries ago. In 2020, the Yanks could learn a thing or two from the Brits.
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