The economy is in crisis, but the housing market is booming : The Indicator from Planet Money Most of the U.S. economy is in crisis: Unemployment and bankruptcies are skyrocketing, and millions aren't paying rent. But home sales are skyrocketing, too. In fact, they're rising at a record pace.
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The Coronavirus Housing Boom

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The Coronavirus Housing Boom

The Coronavirus Housing Boom

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

STACEY VANEK SMITH, HOST:

Tania Zapata (ph) and her husband moved to San Francisco about seven years ago. They both work in tech, so it was a smart professional move. And they both grew up in big cities, and they like city life.

TANIA ZAPATA: I just love, you know, like, the practical life of the city, you know, like walking to the supermarket, walking to places, being able to have all of the wonderful things that a city brings, which is to go to theater, museums, on top of knowing that we wanted, also, to be close to, you know, like, anything that was related to work.

CARDIFF GARCIA, HOST:

Tania and her husband found a really nice apartment. It was in a high-rise in downtown San Francisco - two bedrooms, 1,400 square feet. That sounds great.

VANEK SMITH: (Laughter).

GARCIA: It does. It was...

VANEK SMITH: Only to other people who live in big cities, but yes, it does. Oh, my gosh.

GARCIA: I know. And that was enough space for them and their 7-year-old daughter. It was really expensive, but their daughter's school was a half a block away, and the city was at their feet. And for San Francisco, 1,400 square feet is kind of like a palace, really.

VANEK SMITH: But Tania says after coronavirus closed the city down, their palace started to seem a little less palatial.

ZAPATA: You know, like, once you have to be in your apartment 24/7, you know, you sort of start seeing how small the space is, especially when you have a child. Things start to kind of get smaller on you. You know, like, your walls start to kind of get closer and closer, as if they were moving.

GARCIA: The museums, the restaurants, the theaters - they were all closed. Tania and her husband were both working from home, and it seems like their daughter's school is not going to reopen in the fall. And also, Tania and her husband are expecting another child.

VANEK SMITH: So they started to think, we're paying all this rent, and it seems like we're dealing with all of the hard parts of city life and not getting any of the benefits. So why are we here?

GARCIA: As it turns out, millions of people all across the country are asking themselves this exact question right now.

GLENN KELMAN: It's close to an exodus.

GARCIA: Glenn Kelman is the CEO of Redfin, an online realtor. Glenn says that when the economic fallout of COVID-19 first hit, housing demand crashed. And he assumed that they were in for some lean years, but that's not what happened at all.

KELMAN: We're hiring hundreds of people. And we're saying, there's unemployment. There's people protesting in the streets. There's social unrest. There's a second surge of infections. Should we really hire more real estate agents? And the answer so far has been yes.

VANEK SMITH: Because there's just so much demand.

KELMAN: There's so much demand.

GARCIA: Glenn says traffic on Redfin's website is up 40%. And realtors are so overbooked that they are actually turning customers away.

VANEK SMITH: Which is pretty mind-blowing if you consider that the unemployment rate in the U.S. right now is the worst it's been since the Great Depression.

This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.

GARCIA: And I'm Cardiff Garcia. Today on the show, the coronavirus housing boom. Who is buying houses? And also, why and how this is even possible at a time when the entire country is in a terrible economic crisis.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

VANEK SMITH: Glenn Kelman has been the CEO of Redfin for 15 years. And he says for all that time, people looking for a home always put this one thing as their top priority. Rich, poor, urban, rural - people buying homes always had this one big question.

KELMAN: What about the commute?

GARCIA: The commute to work.

VANEK SMITH: Yes, it's the old real estate mantra - right? - of time immemorial - location, location, location.

GARCIA: Yeah. And most of the time, those locations were big cities where most of the jobs were concentrated. And as a result, buying a home in these cities had become a kind of blood sport.

KELMAN: The New York real estate market, the San Francisco real estate market - these were insane markets where there were bidding wars with 20, 30, 40 buyers.

VANEK SMITH: Glenn says smaller cities, rural areas were just a different world. In fact, over the last few years, housing sales had been a little sluggish. And there was a bunch of speculation about why millennials weren't buying houses and what was going on.

GARCIA: Yeah, that has changed. The National Association of Realtors announced just today that from May to June, just as the COVID-19 crisis was bearing down on businesses and millions of people were losing their jobs, pending home sales rose more than 16%. That's the biggest monthly rise on record.

VANEK SMITH: That is crazy to me because, you know, like, 1 in every 5 Americans is on unemployment. Like, it's, like, blowing my mind that homeownership rates might also be going up or that there's kind of a real estate boom. But it sounds like there is.

KELMAN: Well, it's white-collar professionals who are able to work from home. In some ways, this is a sign that the economy is just officially split in two. You have people who are worried about unemployment benefits running out. And at the same time, you have other people who are able to work from home and thinking about the home all the time. And that's where they want to spend their money. These are the people who are really benefiting now because even if the economy is going through a crisis, for them, it's not a crisis. It's just a sale.

GARCIA: Glenn says that for the people who are lucky enough to have kept their jobs, a huge number of them are working from home now, and that's changed everything.

KELMAN: The traffic to listings that are in towns with populations of less than 50,000 people is up 87%.

VANEK SMITH: In other words, it's no longer location, location, location. It's more like space, space, space.

GARCIA: And Glenn says he's also seeing a big migration of people out of big cities like New York, LA, Chicago and San Francisco to smaller cities like Palm Springs, Tucson, Austin, Grand Rapids and Nashville.

VANEK SMITH: And those tiny San Francisco and New York apartments that had 40 people in a bidding war - people are leaving those apartments in droves. In fact, Tania Zapata and her husband noticed this a couple of months ago. A lot of people were moving out of their San Francisco high-rise.

ZAPATA: I started seeing a lot of people moving out of the building.

VANEK SMITH: And Tania and her husband started to think, maybe they have the right idea, and they started looking around on the Internet.

ZAPATA: And then one day, my husband saw this house in Napa which is in the middle of a vineyard, and the house is so beautiful 'cause you have vineyards all around the house. It has a space with fruit trees and also, you know, like, raised beds for growing your own vegetables. So we were like, wow, this is amazing. Let's go to Napa.

VANEK SMITH: The house was not cheap. In fact, it was about twice the rent that they were paying in San Francisco. But it had more than three times the amount of space. Also, their parents could move in with them. They had this big yard and all this land for their daughter to run around.

GARCIA: Yeah. Glenn Kelman, CEO of Redfin - he says people are making Tania's calculation every day now - paying the same amount of money that they were paying in a dense city but getting way more space. For example, he is seeing a lot of requests for extra bedrooms for parents and grandparents and requests for extra rooms for offices and home gyms.

VANEK SMITH: And now, with so many people investing in homes and lives that are pretty far away from their offices, Glenn thinks we will never go back to work the way that we used to. In fact, he says this is what he found at Redfin when he surveyed his staff about coming back to the office.

KELMAN: And I think what we were hoping to hear is that people wanted to come back to the office because we have an office. There's a fridge stocked with diet Cokes and baskets of almonds and chocolates - and won't you come back and eat all this food? And the answer was no. Fourteen percent of our workers said they want to work at least four days a week in the office, and the rest said, I want to come in only occasionally.

VANEK SMITH: Wow.

KELMAN: I want to stay at home. So we will ask again before breaking our lease, but at some point, you just have to wonder, why do we have four floors in downtown Seattle?

GARCIA: Meanwhile, Tania Zapata says that she and her family have been settling into their new life in wine country. And so far, she has not missed the city at all.

ZAPATA: I remember the day that we moved here. We were getting out the car, and my daughter asked me, do I need to get out the car with a mask? And I was like, no, you don't have to. This is our home now. I don't know. I mean, we'll see how things turn out within a year, year and a half, two. But so far, I'm so happy that we moved.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

VANEK SMITH: This episode of THE INDICATOR was produced by Camille Petersen, fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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