So it may be fitting that a K-shaped recovery from the COVID-induced downturn would be accompanied by an increasingly unequal housing market. What’s less certain is what that will mean for the broader economy and markets.
“I definitely think the pandemic widened the gap between the haves and the have-nots,” said Glenn Kelman, CEO of Redfin
“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 see housing as a luxury good.”
One of the clearest signs of the new affluence is that people with means have been able to go anywhere they want to escape the pandemic’s risks, or even its doldrums, while have-nots have been stuck in place.
“The customers we serve are people in white-collar professional jobs with massive gains from the stock market who are free to work anywhere in the country,” Kelman said. “For them this hasn’t been a catastrophe, but a bonanza.”
To be sure, there’s a yin and yang to housing. When people with greater means settle in lower-priced areas, it can help boost property values. But it can also prompt difficult cultural reckonings. And Kelman worries that such migrations may simply pressure prices upward everywhere, making it harder for more people to access the housing market, and perhaps the ladder into the middle class that homeownership has long represented.
“I want to be mindful of the affordability problems this will create,” he said in an interview. “It creates political turmoil and anxiety. There isn’t a city yet that has dealt with it well — but there isn’t a city yet that wouldn’t want to have that problem. At the end of the day, you want more people moving to your city, especially people with good jobs.”
Steve Blitz, chief U.S. economist for TS Lombard, takes a somewhat different view of the shifts of the past year.
“It’s the unfortunate aspect of any economic disruption that the higher end always manages to work its way through with minimal disruption to their lives and the less fortunate bear the burden. There’s nothing new about that,” Blitz said.
What’s more, he thinks the COVID exodus may actually wind up being a good thing for the housing market and the economy.
Existing homeowners — largely baby boomers — have been holding tight to their homes for years, making it harder for younger Americans to crack into the market, Blitz pointed out.
“And now everything’s gotten shook up,” he said in an interview. “Now that the log jam has been broken,…