Therefore, it may be appropriate that the K-shaped recovery from the recession caused by COVID will be accompanied by an increasingly unequal housing market. What is less certain is what that means for a wider economy and market.
Glenn Kelman, CEO of Redfin, said:
“When I started this business, there was widespread consensus about making the American Dream available to low- and middle-income earners. Since this year, I now consider housing as a luxury item.”
One of the most obvious signs of new affluence is that those who have the means could go anywhere to escape the risk of a pandemic and even its downturn.
“The customers we serve are white-collar professionals who are free to work anywhere in the country and are making significant profits from the stock market,” said Kelman. “For them, this was a big hit, not a catastrophe.”
Indeed, homes have yin and yang. When people with larger means settle in lower-priced areas, it can help increase the value of their assets. But it can also encourage difficult cultural calculations. And Kerman said that such migration would only push up prices everywhere, making it harder for more people to access the housing market and perhaps a ladder to the middle class, which homeowners have long represented. I’m worried about it.
“I want to be aware of the affordable issues this causes,” he said in an interview. “It creates political turmoil and anxiety. No city has managed it well, but no city wants to have that problem. After all, you have more people, especially good jobs. I want people who are doing it to move to your city. “
Steve Blitz, chief US economist at TS Lombard, has a slightly different view of last year’s changes.
“The unfortunate aspect of economic turmoil is that the high end can always get through with minimal disruption to their lives, burdening the underprivileged. There is nothing new about it.” Blitz said.
In addition, he believes that the COVID outflow may actually be good for the housing market and the economy.
Existing homeowners (mainly baby boomers) I’ve been hugging my house for yearsBlitz pointed out that it makes it difficult for young Americans to enter the market.
“And now everything is shaking,” he said in an interview. “Once the log jam has been resolved, we will continue. Over the last decade, there has been a significant lack of mobility for people moving to other cities for employment. More mobility is better It means the labor force. “
In addition, employment for the high-paying construction industry.
Kerman does not object to the economic implications, but he is worried about how financial markets are functioning while others are locked out.
“March 2020 was a disaster,” Kerman said. “The credit market was closed and was about to threaten the US economy. A large amount of stimulus was put into the system But only half of America had access to it. Even if there is a big change in the ability of working class people to access credit, it’s a big storm for those who have it. We see the rise of so many jobs you are paid for in stocks, and many of our financial and economic indicators do not explain it. The people we sell homes don’t use their salary, they use their portfolio. “
The uneven recovery from the subprime bust 10 years ago and the reaction of policy makers to it are noteworthy. Many analysts believe that inequality has increased And have Causes populist tendencies It helped elect Donald Trump in 2016.
“Previously, I was able to work hard so that I could afford a house,” Kerman said. “I think it will change. This is a big change.”
Next week’s economic calendar will bring up-to-date CPI inflation on Wednesday and an early survey of CPI on Friday, but investors will not be able to see housing data until the second half of the month.
Last week, Dow Jones Industrial Average
Week ends with a 1.8% rise, S & P 500
Closed 0.8% higher.Nasdaq Composite Index
It fell 2.1% in a week, but has barely returned to the positive territory over the past year.
Is the house a luxury?This is what a K-shaped recovery means for real estate
http://www.marketwatch.com/news/story.asp?guid=%7B21005575-02D4-D4B5-4572-D2E739BB2DE7%7D&siteid=rss&rss=1 Is the house a luxury?This is what a K-shaped recovery means for real estate