Housing Rebound During Pandemic Exposes The Wealth Divide

One of the troubling aspects of the coronavirus shutdowns has been that the pandemic has pulled back the curtain on the haves and have-nots. The crisis is testing resilience across all sectors of the economy, including the housing market.
CENTRAL, Hong Kong - July 15, 2020 - PRLog -- White-collar professionals with job security, the ability to work from home and access to cash and credit have been able to continue their home searches and take advantage of low mortgage interest rates. Struggling the most are those with low-income jobs in industries like service and hospitality—groups with a higher percentage of Blacks and other minorities—that had largely already been priced out of the housing market even before the economy braked sharply, according to a new report by Redfin real estate brokerage.

"Record unemployment for low-income jobs and a skyrocketing stock market only deepens the divide," the report finds. "Because of this inequality, the pain of the coronavirus recession is likely to be over relatively quickly for the economically privileged, even in areas where unemployment has soared."

Redfin lead economist Taylor Marr pointed out, "With record-low interest rates and relative job security in spite of the recession, higher-income home buyers are already coming back into the housing market. Because of this quick bounce back in home-buying demand, this recession is playing out very differently than the Great Recession, and we're not seeing much impact on home prices so far."

A Federal Reserve employment survey taken in May shows that the unemployment rate for those at the top of the income spectrum ($100,000 and above) was 10%, less than half of the 21% rate among those at the bottom end who are making less than $60,000.

In addition to the disparity in unemployment across income brackets, there is a large racial gap, which can be seen in the May unemployment data from the Bureau of Labor Statistics.

"The outsized impact of this recession on Black families is just the latest in a long string of inequities including segregation, redlining and home lending discrimination that continue to impede their ability to build wealth," the report states. "Even before the current surge in joblessness, the unemployment rate for Black families was three points higher than the rate for white families. Now that difference has doubled to six points."

Home-buyer demand has been recovering in nearly every city, even those with the highest levels of unemployment, driven by record-low mortgage rates and pent-up demand. The strongest comeback has been in Detroit, where the April unemployment rate was nearly 25%.

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