The US housing market is booming despite the coronavirus crisis, but the insatiable appetite for homes has skyrocketed prices and destroyed the dream of home ownership for many low-income families.
“It’s a story of rich and poor,” said Dana Scanlon, a Washington real estate agent.
In an attempt to mitigate the damage of the pandemic in the world’s largest economy, the Federal Reserve cut interest rates almost to zero in March.
As Scanlon explains, “That gave a huge boost to the purchasing power of those still employed … where they can work from home.
For many, he added, it even meant “a slight increase in savings” due to the decrease in expenses of going to and from work and eating out, he says.
That means that some families have more money to improve their home or even to buy a second one.
With many white-collar employees considering working remotely alone in the medium term and with children attending classes by Zoom, the pandemic stimulates demand.
The increase in home purchases surprised industry experts who still remember how the real estate market bottomed out in the great crisis of 2008/2009.
But buying a home is not easy for all Americans who dream of it.
– “Pyramid” of buyers –
“There is a certain kind of pyramid, or ladder, of buyers,” says Scanlon.
Those who live in a studio apartment are looking for a one-bedroom apartment and those who have a one-bedroom apartment are looking for a house in the suburbs.
In October, the sale of used homes reached its highest level since the beginning of 2006. Last month 6.85 million homes were resold, against 6.54% million of the previous (+ 4.3%) and in the measurement annualized, the increase was 26.6%, according to the association of real estate agents (NAR)
But the reduction in the stock caused a vertiginous rise in prices.
According to the NAR, the median price of individual homes was up 12% in the third quarter compared to the same period last year to $ 313,500. That means prices rose four times faster than median household income (+ 2.9%), according to the NAR.
Consequently, more and more people who were planning to buy a home for the first time must now give up. And the share of “first-time owners” declined: 31% in 2020 versus 33% a year ago, said Lawrence Yun, NAR’s chief economist.
“Due to the sharp increase in prices, it is increasingly difficult for tenants to save” for their first purchase, he explained.
– Secondary houses –
From a bird’s eye view, the number of people looking for a second home has increased.
In West Virginia the increase was between 25 and 30%, says real estate agent Tracey Scott who works in that and other states near Washington.
In his opinion, teleworking was already emerging as “a trend before the crisis” and continues to be the key to the real estate boom.
“We will probably never return to the world of work that we used to know,” says Scanlon, his Washington colleague.
However, it regrets the increase in inequality in accessing housing because, according to it, “unfortunately this type of crisis has an impact that goes beyond the current period.”
For Lawrence Yun, the only way to reduce the gap is to increase supply “through the construction of houses and encourage real estate investors to sell their properties.”
That way, those who plan their first purchase “will have better opportunities to become owners,” he concluded.