There’s a growing divide in real estate, with some home shoppers fortunate enough to be able to buy newer and bigger homes, while others who have experienced job losses face losing their current home.
The U.S. unemployment rate grew to 8.4% in August, and many Americans have been left struggling to pay their mortgages or monthly rent. Lawrence Yun, chief economist of the National Association of Realtors, says another 10 million jobs must be created to get the U.S. economy back to where it was before the coronavirus pandemic.
Moreover, a survey by the Census Bureau recently revealed that 42% of renters who earn less than $35,000 per year say they have only slight, or no confidence in their ability to pay September’s rent.
“The level of economic suffering for families is heartbreaking if we don’t figure out how to help unemployed Americans pay rent,” Sam Gilman, co-founder of the COVID-19 Eviction Defense Project, told USA Today. “Eviction leads to horrible consequences for families. It can lead to homelessness, kids not going to school, and is linked to deaths of despair.”
Gilman estimated that up to 40 million Americans are at risk of being evicted at the end of the year if nothing is done. He said that eviction and foreclosure moratoriums that extend to the end of the year could well be postponing the inevitable.
“We are only delaying this huge build-up in rental debt and the precursor to eviction,” Gilman said. “Once rent comes due after the holidays, the circumstances for millions of Americans likely will not have changed.”
The most recent eviction moratorium came into effect on Friday, and requires tenants to certify or testify under penalty of perjury that they’re doing everything that they can to pay. Some of the obstacles that preclude them from paying the rent include job losses or wage reductions, and medical expenses.
Meanwhile, as millions of renters worry about losing their homes, there are millions of buyers at the other end of the spectrum with secure, well paying jobs that are flooding the market. Indeed, the housing market has emerged as one of the main drivers of economic recovery, with 27,700 jobs added to the construction industry in recent months. In addition, the NAR has seen record levels of membership, Yun said.
Those with high-paying jobs are looking to take advantage of record low mortgage rates, and many are looking to upsize during the pandemic.
“There’s a fortunate group of Americans with a steady paycheck that didn’t go on a big vacation, but did end up buying new furniture, appliances, or are renovating,” Ted Rossman, an industry analyst at Bankrate, told USA Today.
Citing a recent survey, Bankrate said around 59% of homeowners in the U.S. have completed at least $500 worth of home upgrades this year, or are planning to do so before the end of the year.
Others, instead of sprucing up their existing home, or aiming for something new and bigger. With that, home prices have rapidly escalated as demand increases. Now, the median national price for an existing home has hit $304,100, the first time it’s ever surpassed $300,000, the NAR said.
The market well and truly belongs to sellers at present, Rossman told USA Today.
“There’s still a lot of interest in sellers getting top dollar for their homes and buyers getting more space. The work-from-home trend has legs even beyond the pandemic because many companies have found that workers can be productive from home and it saves them money on office space. That has big ripple effects for the housing market if work-from-home becomes more permanent,” Rossman said.