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For sale: In the middle of the corona crisis, people are suddenly interested in buying real estate who haven't done it before
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As a bio teacher, Joy Douglas is not one of the higher earners in the USA.
But the 43-year-old has recently become a proud homeowner in Washington.
In mid-June, when her school in the north-east of the capital was closing for the summer, she saw the time had come to move from tenant to owner.
"That wasn't something I had on my screen before. A lot of my friends bought. I wanted to travel," says the African American.
But in the pandemic crisis, mortgage rates had fallen to an all-time low, and acquaintances warned her not to miss the opportunity: "If Trump leaves office, interest rates will rise again," they told her.
So she decided to get it done before the November presidential election.
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Joy Douglas: "That wasn't something I had on my screen before. A lot of my friends bought. I wanted to travel."
Photo: Joy Douglas
Four weeks after their decision, Douglas signed the purchase agreement.
She and her cat Peaches will soon be relocating to the extreme southeast of Washington, where gentrification is still slow.
The row house was advertised for $ 450,000, but in the end she had to put down $ 470,000 to get the bid.
"I expected that I wouldn't have a lot of competition in the Covid crisis. That was a mistake."
The prices are increasing
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Joy Douglas' house: She hadn't expected competition during the crisis
Photo: Joy Douglas
Just like the first time buyer, many professionals were surprised by the boom in the housing market during the deep Corona recession.
In Washington and the surrounding commuter districts, the industry had sales of $ 5.3 billion in July, an increase of 26 percent over the previous year.
The median price in the metropolitan area climbed to a ten-year high, for one of the typical terraced houses in Victorian style with fake gables, a record average of $ 800,000 is now called.
But home hunters are not only swarming in the capital.
Nationwide, sales of new single-family homes rose by 36 percent in July compared to the previous year.
Because supply does not keep pace with demand, prices rise.
The real estate industry has not only overcome the pandemic, but is even benefiting from some of its consequences, writes investment expert Ed Yardeni: The Fed's glut of money guarantees low interest rates, and many Americans are looking for more space to work from home and maintain social distance can.
"All of this has helped the real estate industry do a lot better than anyone could imagine."
In the San Bernardino district of California, a line of buyers recently formed a day before a greenfield project went on sale.
Equipped with a respirator and a parasol, the interested parties approached at temperatures of 40 degrees in order to get hold of one of the 40 parcels of the "ShadeTree" settlement.
Fireman Jason Alonzo also spent the night on a garden chair in front of the sales office.
As a former soldier, he learned how to sleep anywhere, the 34-year-old told the Bloomberg news agency - and from his point of view this effort was worth it: The next morning, Alonzo signed the purchase contract for a 680,000 dollar house in the project in Ontario, 70 kilometers from Los Angeles.
The rediscovery of suburban hell, previously reviled by young people, is at the expense of previous dream metropolises: According to the real estate portal Zillow, the inventory of sales properties in San Francisco was almost 100 percent above the previous year at the beginning of August, compared with a nationwide decline of 25 percent.
And Manhattan's wealthy clientele is also looking for a new home in the neighboring state of New Jersey.
"People from New York come with a sense of urgency, and what they want is space," local agent James Hughes told the New York Times: "The demand is insane."
Locals report realtors ringing their doorbells urging them to sell their home.
According to the Zillow survey from August, however, urban flight has so far been limited to the two most expensive metropolises in the USA.
The US housing market has become a "locomotive of economic recovery", notes the consulting firm BCA Research.
Because not only the construction industry makes money.
Sofa manufacturers, refrigerator manufacturers and pool providers all participate when the newcomers furnish their new home.
The generation of millennials, who have long been considered unwilling to settle down at home, now seems to be part of the party.
Around a third of house sales in July were made by first-time buyers.
Yardeni suspects that some couples use the saved money for the down payment for the wedding celebration, which had to be canceled due to Corona.
Such an event usually devours an average of around 40,000 dollars.
Including the ring, but not including the honeymoon.
Joy Douglas and the fireman Alonzo, however, did not need any equity at all.
The state generously encourages home ownership.
She received $ 36,000 from various pots, says the teacher.
She says she can handle the future burden of $ 2,300 a month.
She set herself a budget.
She doesn't want to risk becoming a "house poor", someone whose burden from the house is so high that he no longer has any leeway for unforeseen expenses.
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Worry about a wave of evictions, personal bankruptcies and oversupply
The corona crisis has shown how explosive the lack of reserves can be.
Around four million homeowners take advantage of the statutory option to suspend or reduce mortgage payments.
But the moratorium is only valid for one year.
In the end, the development of the housing market will also depend on "the containment of the pandemic and the recovery of the labor market," warn the economic experts from BCA Research.
Both are slow at best.
"Let us remember the recent past," warns US Nobel Prize winner Robert Shiller.
Anyone who feels confident that the housing boom will last forever is ignoring "the disaster" that triggered the last price bubble: the global financial crisis.
2020 is not 2005, the economist himself admitted in a guest post in July.
But if the state cuts its aid, there is a risk that there will be a wave of evictions, personal bankruptcies and oversupply.
Joy Douglas is not worried about this.
She has savings and a stable job as an employee of a public school.
She now wants to get a dog for the house, preferably a Doodle, the trendy mix of Golden Retriever and Poodle.
America's pet industry is also booming during the pandemic.
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