Gigantic Rescue Plan Act Should Give Housing a Jolt

100 us dollar bill

The passage of the massive American Rescue Plan Act last week gave those who plot the ebb and of housing activity much to ponder. Even without the Act, most observers already expected that by the end of spring, the majority of the U.S. economy would be undergoing a healthy recovery due to the escalating rollout of the COVID-19 vaccines. It was predictable that the Act’s injection of trillions of dollars (including $20 billion for increased vaccine production) would add strength to the rebound.

Sellers Should be Happy

But what would be the impact on in general—and housing in particular? For sellers, the outlook couldn’t help but be positive. According to website therealdeal.com, in February, U.S. sellers had been chalking up close to 100% of their asking prices (99.6%, to be precise). The pace of sales looked to be up as well if the Mortgage Bankers Association report of a 7% increase in weekly loan applications was a fair indication. The MBA concluded that despite rising rates, homebuyers appeared “ready to ‘spring’ into action.”

Investors Have Cause to Celebrate

At least for the short run, real estate investors also seemed likely to benefit. The direct stimulus checks to individuals were sure to retail spending—ultimately flowing to the retailers’ landlords. Additionally, consultants at Novogradac identified an Emergency Rental Assistance portion of the Act—a 21,550,000,000-dollar (those are billions!) monetary injection that will come to the aid of renters. Their landlords may be unnamed, but they are definitely part of that picture.

Riding the Spring Wave

By the week’s end, it was the size of the package that continued to draw both praise and criticism—most audibly from those worried that the downstream would greatly outweigh the immediate benefit. The focus was also shifting to a discussion of how rapidly the could realistically be injected into the economy—and whether it might overheat an already recovering economy. Here in, for the moment at least, it seems evident that the immediate result will be to assist the dawning spring-summer busy season.


The Dog Solution