It may therefore be appropriate for a K-shaped recovery from the COVID-induced downturn to be accompanied by an increasingly uneven housing market. What is less certain is what it will mean for the broader economy and markets.
“I definitely think the pandemic has widened the gap between the haves and those who have not yet,” said Redfin RDFN CEO Glenn Kelman.
‘When I started this business, there was a broad consensus on the American dream accessible to middle- and lower-income people. After this year, I now see housing as a luxury good. ”
Read: Redfin CEO: Technology is finally ready to change how you buy and sell your home
One of the clearest signs of the new prosperity is that people with means could go wherever they wanted to escape the risks of the pandemic, or even the bad consequences of it, while the non-stuck got stuck.
“The clients we serve are people in professional professions with white collars with a huge profit from the stock market, who are free to work anywhere in the country,” Kelman said. “For them, it was not a catastrophe, but a bonanza.”
To be sure, there is a yin and yang to housing. When people with larger resources settle in cheaper areas, it can help increase property values. But it can also cause difficult cultural settlements. And Kelman is concerned that such migrations could simply push prices upward everywhere, making it harder for more people to access the housing market, and perhaps the middle-class ladder that homeowners have long represented.
“I want to be mindful of the affordable problems it will create,” he said in an interview. ‘It creates political unrest and anxiety. There is not yet a city that handles it well – but there is not yet a city that does not want the problem. At the end of the day, you want more people to move to your city, especially people with good jobs. ”
Steve Blitz, chief U.S. economist at TS Lombard, takes the shifts of the past year a little differently.
‘This is the unfortunate aspect of any economic disruption that the higher end always manages to work through their lives with minimal disruption to their lives, and the less fortunate bear the burden. There is nothing new about it, “said Blitz.
What’s more, he thinks the COVID exodus could actually be a good thing for the housing market and the economy.
Existing homeowners – mostly baby boomers – have been holding on to their homes for years, making it harder for younger Americans to hit the market, Blitz pointed out.
“And now everything is shaken,” he said in an interview. ‘Now that the wood jam has been broken, it’s going to continue. In the last decade, there has been a clear lack of mobility in terms of people moving to other cities for work. More mobility means a better workforce. ‘
Finally, Blitz points to the well-known boost to the economy through the multiplier effect of home buying – buying at Home Depot HD,
using credit cards V,
more, rent for well-paying construction work, and so on.
Kelman does not dispute the economic impact, but he is concerned about the way financial markets have worked for some, while others have been excluded.
“March 2020 was a disaster,” Kelman said. “Credit markets were on the verge of ending and threatening the US economy.” A major stimulus has been put into the system, but only half of America has access to it. This is a major windfall for the port, even if there is a change in the sea in the ability of working class people to gain access to credit. We are looking at the increase in so many jobs where you are paid in stock and many of our financial and economic statistics do not even account for that. The people to whom we sell homes do not use their salary, but use their portfolios. ”
It is noteworthy that the unequal recovery of the subprime crisis a decade ago, and the reaction of policymakers to it, is seen by many analysts as increasing inequality and creating the populist tendencies that helped Donald Trump in 2016 to be elected.
Related: This graph shows the importance of the housing market and it is getting worse
“In the past, you could work well to afford a home,” Kelman said. “I think that’s going to change. It is a profound transformation. ”
Investors will only look at housing data later in the month, but next week’s economic calendar brings an update on consumer price inflation on Wednesday and an early look at March sentiment on Friday.
Last week, the Dow Jones Industrial Average DJIA,
ends the week with a 1.8% profit, 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 a positive area, albeit scarce, for the year so far.
See: 16 million people have just been fired, but US equities have had their best week in 45 years