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The federal government CARES Act and various cities and banks are offering relief. Here’s what you should know.
Brandi Gee has been living in a Georgia hotel with her son for nearly three months after losing her job and her rental home during the COVID-19 pandemic.
In Indiana, Jana Miller and her husband jumped at the opportunity to buy their dream home in the town of St. John after the pandemic hit.
The coronavirus recession has opened a wide chasm between the haves and have-nots in America’s housing market. Some people can afford to flee cities and upgrade their life at a time when the median price for a home is at its highest ever. But other Americans, like Gee, aren’t confident that they will ever own a home and face lasting financial damage from the pandemic following a historic wave of job losses, looming evictions, surging home prices and stagnant wages.
Gee, who lives in Warner Robins, Georgia, was laid off from her job as a prep chef at a country club in March, a major blow to her finances. The restaurant and bar industry she worked in was among the hardest hit by layoffs caused by coronavirus shutdowns.
She was paying rent month-to-month before the pandemic hit, then briefly lived with a friend because she no longer could afford rent. When she struggled to find a new job and brokers didn’t return her calls to help find a house or apartment to rent, she was forced to move to an extended-stay hotel, she says.
Gee has had a handful of job interviews in the restaurant industry in recent weeks, but nothing has panned out. She fears she’ll get evicted from the hotel if she doesn’t find a job soon.
“We’re barely surviving,” Gee, 46, says. “I’m scared we’ll end up sleeping on the streets. I don’t know if I’ll ever recover.”
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In Indiana, Miller, 40, thought she’d remodel her starter home to get another five to 10 years of use out of it because her family couldn’t find a home in their price range.
But in June, the price on a two-story home she’d been eyeing before the pandemic dropped.
The sellers said they would accept her offer if she put her home up for sale immediately. Just four days later, she sold her home for $11,000 above asking price after more than a dozen showings.
“It was a whirlwind,” says Miller, a physical therapist. “We were really blessed to get our dream home during such a crazy time in this world.”
Their new home comes with a finished basement and four bedrooms for her growing family of five.
Banners against renters eviction reading no job, no rent is displayed on a controlled rent building in Washington, DC on August 9, 2020. (Photo by Eric BARADAT / AFP via Getty Images) (Photo: ERIC BARADAT, AFP via Getty Images)
America’s housing divide
The economic downturn has led to a 10.2% unemployment rate in July, leaving many Americans struggling to buy a home or afford rent, particularly lower-wage workers in hard-hit hospitality and retail jobs.
Among renter households earning less than $35,000 per year, 42% have slight or no confidence in their ability to pay September rent, according to the most recent U.S. Census Bureau Household Pulse Survey.
“The level of economic suffering for families is heartbreaking if we don’t figure out how to help unemployed Americans pay rent,” says Sam Gilman, co-founder of the COVID-19 Eviction Defense Project. “Eviction leads to horrible consequences for families. It can lead to homelessness, kids not going to school and is linked to deaths of despair.”
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The Trump administration said Tuesday it is implementing a national four-month moratorium on residential evictions. It goes into effect Friday and will run through Dec. 31, applying to individuals earning less than $99,000 a year and who are unable to make rent or housing payments. The move comes after Republicans and Democrats in Congress failed to reach a deal on another coronavirus rescue package.
The moratorium is a vital step because it will protect millions of Americans from becoming homeless through the December holidays, housing experts say. But it doesn’t solve the eviction crisis, they added, since there are loopholes in the moratorium that may leave some renters at risk of removal.
The order would meaningfully reduce the number of Americans who are at risk of non-payment eviction. But it doesn’t help renters pay rent, says Gilman. Some experts have argued for extending enhanced unemployment benefits so that renters and homeowners who need emergency cash can pay their rent and mortgages.
“We are only delaying this huge build-up in rental debt and the precursor to eviction. We still need rent relief from Congress to solve the underlying economic conditions,” says Gilman. “Once rent comes due after the holidays, the circumstances for millions of Americans likely will not have changed.”
An estimated 30 million to 40 million Americans are at risk of eviction by the end of the year once the moratorium expires, according to Gilman.
Homebuying demand signals wealth divide
Even as millions of renters fear losing their homes, the housing market has become a bright spot in the economy — and could even drive its recovery. That marks a very different trajectory for housing compared with the aftermath of the 2008 financial crisis, which saw a collapse in real estate prices.
Homebuyers with secure, higher-paying jobs and access to cash and credit have been able to take advantage of record-low mortgage rates.
Meanwhile, job losses disproportionately affect low-income and Black workers, housing experts say.
And there are deep disparities as well. For white households, the national homeownership rate stood at 73.7% in the first quarter of this year, up from 73.2% in the first quarter of 2019, according to a recent report from real estate brokerage Redfin. For Black households, that rate was 44% during the first quarter of 2020, up from 41.1% a year prior.
“The value many Black families have missed out on because they were impacted by systemic racism in housing could have been passed down to children and grandchildren, paying for things like higher education, childcare, starting a business and down payments on their own home,” Taylor Marr, economist at Redfin, said in a note.
House prices are rising and the home improvement industry is booming during the pandemic as more Americans work from home, leading them to spend money on new properties or customize their living spaces. Some people are suddenly flush with cash and have access to cheap borrowing.
Home sales have continued to rise, leading to record-breaking prices despite another spike in coronavirus cases in parts of the U.S. The median national price for a home in July reached $304,100, the first time ever it has topped $300,000, according to the National Association of Realtors.
Homebuying is typically a spring and early summer affair, but this year it was delayed because of the pandemic, experts say.
“There’s still a lot of interest in sellers getting top dollar for their homes and buyers getting more space,” says Ted Rossman, industry analyst at Bankrate.
“The work-from-home trend has legs even beyond the pandemic because many companies have found that workers can be productive from home and it saves them money on office space,” says Rossman. “That has big ripple effects for the housing market if work-from-home becomes more permanent.”
Some splurge on renovations, home upgrades
Some Americans are upgrading their life with new appliances, electronics and furniture. And some are planning other home improvements and renovations.
Roughly 59% of homeowners have already completed at least $500 worth of home upgrades during the pandemic or plan to before the end of the year, according to a recent survey from Bankrate.
“There’s a fortunate group of Americans with a steady paycheck that didn’t go on a big vacation but did end up buying new furniture, appliances or are renovating,” says Rossman.
Robin Walpert, a realtor, is one of those people. She and her husband, who live in the Pacific Palisades, on the west side of Los Angeles, began looking for a vacation home in June once she found out her two teenage sons would be doing virtual school for the foreseeable future.
She is repairing her house and building a home gym, but she wanted a place for her family to escape since all of them were stuck there amid the construction.
They hunted for a cabin in Lake Arrowhead, California, but she couldn’t keep up with the competition after everything flew off the market with multiple bids within days, she says. But they’re about to close on an older cabin that had been with the prior owners for four decades. It needs new flooring, renovated bathrooms and kitchen appliances, but Walpert felt fortunate to find anything.
“We felt so lucky that we got our hands on something. It was a mad dash,” Walpert, 48, says. “Everyone went bonkers trying to find something close to L.A. without completely abandoning ship.”
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