[ad_1]
It may therefore be appropriate that a K-shaped recovery from the COVID-induced slowdown is accompanied by an increasingly uneven housing market. What is less certain is what this will mean for the economy and the markets in general.
“I really think the pandemic has widened the gap between the haves and have-nots,” said Glenn Kelman, CEO of Redfin RDFN,
“When I started in this business, there was a broad consensus around making the American Dream accessible to middle and lower income people. After this year, I now consider accommodation a luxury good.
Read: Redfin CEO: Technology is finally ready to change the way you buy and sell your home
One of the clearest signs of the new wealth is that people with means were able to go wherever they wanted to escape the risks of the pandemic, or even its stagnation, while those most in need remained stranded.
“The clients we serve are people in professional white collar jobs with massive stock market earnings who are free to work anywhere in the country,” Kelman said. “For them, it was not a disaster, but a godsend.”
To be sure, there is a yin and a yang in the accommodation. When people with more money move to cheaper areas, it can help increase property values. But it can also lead to difficult cultural calculations. And Kelman fears that such migrations will simply put upward pressure on prices everywhere, making it more difficult for more people to access the housing market and perhaps class-wide. average that homeownership has represented for a long time.
“I want to be aware of the affordability issues this is going to create,” he said in an interview. “It creates political turmoil and anxiety. There is not yet a city that has handled it well – but there is not yet a city that would not want to have this problem. Ultimately, you want more people to move to your city, especially those with good jobs. “
Steve Blitz, TS Lombard’s chief US economist, takes a somewhat different view of the changes of the past year.
“It’s the unfortunate aspect of any economic disruption that the high end always manages to overcome with minimal disruption to their lives and the less fortunate bear the brunt of it. There is nothing new about it, ”Blitz said.
Plus, he believes the COVID exodus could actually be a good thing for the housing market and the economy.
Existing homeowners – largely baby boomers – have held their homes firmly for years, making it more difficult for young Americans to enter the market, Blitz pointed out.
“And now everything is turned upside down,” he said in an interview. “Now that the traffic jam has been broken, it will continue. Over the past decade, there has been a lack of mobility in terms of people moving to other cities to find employment. More mobility means a better workforce. “
Finally, Blitz highlights the well-known boost to the economy through the multiplier effect of buying a home – purchases at Home Depot HD,
using V credit cards,
more, hire for high paying construction jobs, etc.
Kelman doesn’t dispute the economic impact, but he is uncomfortable with the way financial markets have worked for some while others have been left out.
“March 2020 was a calamity,” Kelman. “Credit markets were on the verge of shutting down and threatening the US economy and a massive amount of stimulus was introduced into the system, but only half of America was able to access it. This is a huge boon to the haves even as there has been a drastic change in the ability of working class people to access credit. We’re looking at the rise of so many jobs where you get paid in inventory and many of our financial and economic metrics don’t even take that into account. The people we sell houses to don’t use their wages, they use their wallets. “
It should be noted that the uneven recovery from the subprime mortgage crisis a decade ago, and the response of policymakers, are seen by many analysts to have deepened inequalities and given rise to the populist tendencies that helped elect Donald Trump. in 2016.
Related: This graph shows the haves and have-nots in the housing market, and the situation is getting worse
“It used to be that you could work very well to afford a house,” Kelman said. “I think that will change. It is a profound transformation. “
Investors won’t see the housing data until later in the month, although next week’s economic calendar brings an update on consumer price inflation on Wednesday and a quick look at consumer sentiment for March. Friday.
Last week, the Dow Jones Industrial Average DJIA,
ended the week with a gain of 1.8%, and the S&P 500 SPX,
closed 0.8% higher. The Nasdaq Composite COMP,
was down 2.1% for the week, but managed to return to positive territory, if not barely, for the year to date.
See: 16 million people just laid off, but U.S. stocks had their best week in 45 years
[ad_2]
Source link