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House Keys 2

How Much Has The US Housing Market Been Impacted By The Pandemic? 

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Housing experts throughout the US are currently experiencing a “white hot” market thanks to a multitude of economic reasons. However, problems that existed in the industry before the pandemic are being just as exasperated due to the impact of the past year overall. 

“One of the most prominent housing issues in pre-pandemic America was supply shortages. That has carried over and exacerbated, but we already had evidence of supply shortages heading into the pandemic,” said Matthew Murphy, executive director of the Furman Center For Real Estate and Urban Policy at New York University. 

Murphy also explained that “today’s housing situation has its roots in the last boom-bust cycle. The context here to this current housing moment is that we were still recovering from the 2009 foreclosure crisis, when property values plummeted.” 

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According to the National Association of Realtors (NAR), over the past two decades an underbuilding gap of between 5.5 million and 6.8 million housing units has existed since 2001. 

The National Association of Home Builders found that of “all the new single-family homes built last year across the U.S., none were priced below $100,000. A mere 1 percent fell in the range of $100,000 to $150,000. Home buyers in the bottom one-fourth of the market have been squeezed entirely out of the market for new construction,” the group said in an online post.

“In a pandemic, with people working from home and kids schooling from home, you need more space. We saw a real pickup in demand. People wanted a home with some green space and a community with lower population density.”

“The increase in demand has really been sparked by the record low level of mortgage rates. That’s a real opportunity for anyone who’s shopping for a mortgage or shopping to buy a home, and that’s really sparked the demand, especially among millennials or Gen Xers,” explained Frank Nothaft, chief economist at CoreLogic. 

Prospective buyers are also noticing a major decrease in available homes due to the fact that those who weren’t as economically stunted by the pandemic have been able to get out and acquire more real estate within the past few months of recovery. 

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“You’ve got this 20-plus percent year-over-year price growth, which you think would entice homeowners to sell. The bigger factor is just availability of supply to move into. … There’s nothing to go buy or downsize into,” said Todd Teta, chief product officer at Attom Data Solutions.

Zillow found a nearly 4% increase in housing availability on the market in May, which has been the first time that percentage has increased since July 2020. The NAR found that the average price of existing homes throughout the US have hit a record number of $350,000; up nearly 25% when compared to last year. 

“This is supply and demand on steroids.”

The other major issue is that builders, architects, and construction workers can’t keep up with the demand that the pandemic has created. Costs for certain raw materials like copper or lumber are projected to continuously increase within the next couple of months. That in addition to labor costs and the cost of land overall is causing a lot of buyers to be hesitant with their purchases. 

“There’s an affordability that comes with density, and in a lot of America, you can’t build that kind of housing. This just makes it harder for the market to supply this housing en masse,” Murphy explained. 

“If we see a substantial increase in the proportion of the workforce working remotely, then I think we’re going to continue to see some of this shift to single-family and this shift not just to suburban but to the outer edges of metro areas. When you sever that link between where you live and where you work, then that gives you a lot of flexibility on where you locate,”  Nothaft said.

Unemployment Form

Another 751,000 Americans Filed For Unemployment Last Week 

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With everyone being so focused on the close race to the White House this week, many have forgotten we’re currently in the middle of one of the worst health and economic crises in history. While we may not know who the next President of the United States is quite yet, if one thing is for sure, whoever it is will have to deal with the nation’s massive unemployment problem. 

Last week, another 751,000 Americans claimed first-time unemployment benefits on a seasonally adjusted basis, according to the US Labor Department. Compared to the week prior those numbers are actually slightly decreased, however, the nation has watched hundreds of thousands of citizens lose their jobs every week for the past nine months, so many are wondering when they’ll receive some sort of relief. 

Beyond that, 362,883 workers found out they weren’t eligible for regular state benefits that could be claimed under the Pandemic Unemployment Assistance program. If you add up those totals that’s 1.1 million Americans who filed first-time claims last week. 

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Economists have been adamant throughout this pandemic that one of their biggest concerns would be a plateauing of total initial claims due to a slowdown in the job market. This concern is now a stark reality for so many US residents who have been continuously unemployed and trying to keep their loved ones afloat in the middle of one of the worst global health crises in history. 

Continued jobless claims, which account for workers who have applied for benefits two or more weeks in a row, reached 7.3 million, which is about half a million less than what it was the previous week. However, it’s important to note that even though the number of continued jobless claims has decreased that doesn’t necessarily mean that the amount of unemployed individuals has reduced.

In fact, compared to previous weeks that’s a much slower decline. One of the reasons these claims could be going down could be due to the fact that people have exhausted their state benefits and are now trying to take advantage of other government programs to help in the meantime. States commonly provide around 26 weeks of unemployment benefits. 

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These state-run programs have greatly benefited certain individuals who have run out of their Pandemic Emergency Unemployment Compensation (PEUC), which was obviously created as a result of the Covid-19 pandemic. In the week of October 17th nearly 4 million Americans received PEUC payments, which was a 280,000 increase when compared to the week prior. 

Many Americans are worried about the results of the 2020 election as well as what type of programs will be created with the New Year as the pandemic continues to worsen. Many of the various pandemic relief initiatives for unemployed individuals are set to expire at the end of 2020. Andrew Stettner is a senior fellow at the Century Foundation who recently spoke with the press about what the US needs to do for its people to help us stay afloat as a country. 

“There are simply not enough jobs being created to support all of the workers running out of aid before the end of 2020. It is now time to reach a deal that keeps the lifelines of pandemic relief going into next year. We urgently need action before the holiday season.”

The government is set to publish its October job report this Friday, which economists are projecting to show an additional 600,000 jobs being created for unemployed individuals within the past month. However, even if those numbers hold true America would still be down by more than 10 million jobs when compared to the numbers in February right before the pandemic hit.

Florist at Work

UK’s Largest Wholesale Horticultural Market Struggles For Survival As Rent Rises

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The New Covent Garden Market has been operating since 1670 and has held the same name despite moving locations three times in the past due to space restrictions. The market has a proud and deeply-rooted heritage that all vendors know of.

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NYC Real Estate

Manhattan Real Estate Deals Fall By Nearly 60% As Suburban Market Thrives

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Potential contracts for Manhattan apartments have fallen by more than half this past July while deals in more suburban environments have doubled, proving that many individuals are trying to escape the reality of a close knit metropolitan area in the middle of a global health crisis. 

Technically speaking, the number of signed contracts for apartments and condos in Manhattan has dropped by 57% in July when compared to the numbers one year ago. According to reports from Miller Samuel and Douglas Elliman, the higher end of the market is what’s being hit especially hard, as co-op properties that are priced between $4-$10 million are down over 75% when compared to 2019’s sale numbers. 

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While the number of actual signed listings is decreasing, the number of new apartment listings is continuing to increase. New listings in Manhattan jumped 8% when compared to last year, and the number of unsold apartments is at its highest level in nearly a decade. According to Samuel and Elliman, the market is currently in a position to have more than a 17-month supply of apartments to sell; the typical Manhattan average is an eight month supply.

Obviously the pandemic and lockdown procedures that come with it are impacting the industry. Metropolitan’s all over the world are being hit hard, but Manhattan is especially struggling, especially considering New York City was the initial epicenter for Covid-19 when it first began affecting individuals in America. 

The lockdown is preventing all apartment showings to be done in person, making it difficult to get deals signed. Additionally, many native New Yorkers are fleeing the city for more suburban options to ride out the rest of the pandemic. The numbers in July are a reflection of individuals who either know someone, or have additional properties in more suburban settings; like on Long Island or Westchester even. CEO of Miller Samuel, Jonathan Miller, spoke with the media about these trends and why the city is the last place people want to be right now. 

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“The city is less of an anchor now, it’s going to take longer for the city to recover than the suburbs. Anything within a two-hour radius of the city is as busy as it’s ever been, there’s just a fear of density right now.”

Sales contracts in the Hampton’s nearly doubled with July with 267 signed deals. In Westchester County, deals also doubled when compared to last year with 987 signed deals. However, experienced real estate brokers working in the city aren’t too worried about these numbers. While this is the worst international crisis they may have ever experienced, it’s not the first time the city’s real estate industry has had to recover after mass tragedy. 

Many use September 11th or the Great Recession as an example for the way in which the industry is able to recover along with its citizens. After both, deep discounts on properties in the city is what helped recover New York’s economy, and many are expecting the same results this time around especially among higher end properties.

COVID-19 Real Estate

College Students Organize Rent Strike Amid Covid-19 Pandemic

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One University of London student recently told the story of how he and 200 other fellow students are currently involved in a rent strike due to their inability to afford housing amid the coronavirus pandemic. 

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Rental Car

Rental Car Industry Has Come To A Halt Amid Coronavirus Pandemic

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Rental car companies typically account for about 10% or more of annual new car sales in the United States. It’s estimated that anywhere from 1.7 million to 2 million new cars were purchased through rental companies in 2019 alone. However, like most industries in the world right now, the coronavirus pandemic has caused rental car companies to suffer greatly. 

Rental car companies get around two-thirds of their business from airport locations, but obviously not a lot of individuals are utilizing those facilities at the moment. In fact, the rate of flying via airplane in the United States has decreased by a whopping 94% since the beginning of April. As a direct result of this drop-off, way less people are needing to rent cars. 

Hertz recently made headlines when they announced that they were filing for bankruptcy last week as a result of missing multiple payments to their group of lenders due to a massive drop off in new car purchases. Hertz’ main rival, Avis Budget, has been able to keep themselves in business by immediately cutting off all plans to sell new cars when the pandemic began, and by planning to continue cutting purchases of new cars by 80% within the coming months; Avis is still struggling and losing money, but because of this quick thinking they’re remaining economically viable for now. 

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Enterprise has also found themselves in a relatively viable position as well, however, it’s important to note that even the rental companies that are doing the most “successfully” amid the pandemic still have to deal with lots upon lots of thousands of unused cars that they normally would be gearing up to sell to third-party dealers right now.

At the moment, major sports stadiums throughout the country, such as the Dodgers and Angel Stadium in California, have been called upon to store these unused cars for the time being while no one is attending any sports games. The Los Angeles Times posted a photo of these parking lots, joking that it seemed as though Californians were all in the stadium still cheering for their favorite teams. 

“Hertz said it has sold 41,000 cars from its US fleet and another 13,000 cars in Europe in early March, but that the halting of used car auctions and closure of many used and new car dealerships essentially brought sales to a halt. The difficulty in continuing to sell cars is one of the reasons it cited as the cause of its bankruptcy filing. Avis Budget said it already cut its US fleet by 35,000 in the first half of March,” according to reports from CNN. 

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Rental companies are still preparing to sell these cars, however, and are even estimating they can sell hundreds upon thousands of cars; there are currently about 1.5 million unused rental cars in the US. 

All companies are considering some pretty severe price cuts to get rid of the vehicles, which could be extremely beneficial to anyone in the market for a new car. Now, buyers can likely expect to see these companies listing these late-model cars with relatively low mileage, barely any use, and at a significantly lower price than what’s to be expected (depending on the specific car of course). 

“The sales to rental car companies typically are among lowest-margin sales made by the automakers, especially compared to retail buyers who are more likely to pay for the higher priced options. But while sales to rental car companies “aren’t necessarily the most profitable sales, they move the metal, and generate cash that is needed right now,”  said Jeff Schuster, president of global forecasting for automotive research firm LMC.

Like all industries throughout the world right now, only time will tell how this pandemic continues to impact business and its economic viability.

AIRBNB

Airbnb Hosts Continue To Struggle Supporting Themselves Amid Coronavirus Pandemic

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Worldwide travel has come to an obvious halt, and one of the largest markets that’s felt the direct effects of that is the tourism industry. More specifically, many Airbnb hosts are planning to sell their properties as a means of making up for the money they would normally be earning from the beginning of the summer vacation season.

The real estate market in general is really unbalanced at the moment. Depending on what part of the country you’re living in, how badly the pandemic has impacted your region, and how many individuals are even still willing to proceed with their real estate transactions while the economy is so low, many aren’t able to bring their real estate realities into fruition. 

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Airbnb hosts are gearing up to lose thousands of dollars in lost bookings, cancelled trips, and an overall lack of business. The struggle comes when it’s time for hosts to pay for things such as housing bills, maintenance costs, mortgage payments, and any other payments that are normally covered by the money they earn from hosting. This is hitting homeowners who own multiple properties especially hard as well. 

“We have been working to support our community through multiple efforts, including committing $250 million to help support hosts who were affected by COVID-19-related guest cancellations and $17 million to our Super Host Relief Fund. Our internal data points to guests’ desire to travel and we are preparing to help hosts welcome them as soon as possible, which includes new cleaning measures as well,” an Airbnb spokesperson said in a statement. 

Airbnb has had to lay off about 25% of their workforce amid the pandemic, but also began making these major job cuts before coronavirus even entered into the States. In March, Airbnb hosts were already protesting the company they worked for, claiming that executives rely too heavily on its hosts to make money for the company.

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The protests came specifically after Airbnb announced that it would be paying its hosts only about 25% of what they would normally make back from the company after a client cancellation. Normally, if a client cancels they still have to pay a decent fraction of the renting price (a policy that each host must specifically outline), so that the host has some revenue to make from the transaction and lost time.

“[I] shut down two listings during the coronavirus crisis, one of which was pre-planned. Some of the owners [I] work with are considering winding down more properties, or are looking for long-term tenants, further throwing her business into uncertainty. I’m scrambling trying to figure out what I’m going to do, and what’s going to happen in the future. I’m not making money. With the Airbnb business, I am just trying to minimize my losses. Only one of the houses is meeting its expenses, meaning my rent and utilities,” Christina Zima, an Airbnb host in the San Francisco Bay Area, said to CNN.

Some hosts, like Zima, are turning to Facebook Marketplace to either further rent out their untouched properties, or sell their furniture and other goods to make ends meet. However, selling your valuables online doesn’t compare to making a steady income through a business you previously ran rather independently. 

Other hosts are remaining optimistic that as new safety precautions are dealt out for hosts that their renters will begin to book their properties again. For now, like for every other industry in the country, it’s a waiting game to see how much worse the country and its economy gets amid the pandemic.

Unemployment Claim

Unemployment Rates Continue To Rise Amid Covid-19 Pandemic

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According to the Bureau of Labor Statistics, in April alone, 20.5 million Americans lost their jobs, making this the most sudden and largest decline in employment since the government began tracking the data in 1939. Those losses also account for the 870,000 Americans who lost their jobs in March as well. For comparison, during the financial crisis in 2008 around 8.7 million Americans lost their jobs, total. 

The loss in employment is an obvious result of the coronavirus pandemic and multiple quarantine policies that have been enforced because of it. The unemployment rate went up by 14.7% in April, again, breaking the record for the highest level of unemployment the Bureau’s seen since it began recording monthly employment rates in 1948. 

Once businesses began closing and stay-at-home orders were being enforced in late March millions of Americans began losing their jobs. According to reports the leisure and hospitality industry has been hit the hardest so far with a loss of over 7.5 million jobs, and retail follows it with a loss of over 2 million jobs. 

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Historically speaking, the hardest part of a recession is rebuilding what gets lost. It took the United States the past ten years to create over 20 million new jobs for the American people after the 2008 recession, and now, all of that hard work was diminished in a matter of weeks. However, some big business owners are confident that this situation will be different, since the economic/job losses have been a result of a worldwide health pandemic. 

The larger issue is for industries that involve a more face-to-face consumer experience, such as restaurant workers, hotel employees, and local businesses. There’s going to be less of a demand for businesses like that because it’s going to be more difficult to convince customers to actually leave their homes when it’s not fully necessary. 

So what’s the government currently doing to help ensure our economy can recover from this pandemic and it’s huge economic impact? While it’s easy to make comparisons to our countries current situation and the Great Depression, we also have to understand the US lacked any sort of safety net in the 1930’s. 

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Once this pandemic began, local, state, and federal governments began acting to expand unemployment benefits and extend funding to small businesses. Stimulus checks have been dealt out to every American adult earning less than $99,000 a year, and while these programs have received quite a bit of backlash and have been viewed as not nearly enough action from the government, they have provided some relief to workers and employers across the country.

Congress has expanded unemployment benefits to include an additional $600 a week for the next four months and they also expanded who is eligible to file for unemployment benefits; contractors, self-employed individuals, and workers in the gig economy can now apply. 

In New York, Governor Andrew Cuomo claims that the state was able to hire 1,000 new employees specifically for sorting through unemployment claims. Government workers in New Jersey are also looking for experienced workers to help them work with decade-old computer programming for this process. So in a sort of sad ironic twist, the decline in the economy is simultaneously helping it rebuild itself, slowly. 

Overall, however, many Americans are disappointed in how long it’s taking all levels of government to respond to the many needs of the people right now. More than half of all Americans still haven’t received their stimulus checks, and even when they do they know it won’t be able to help much. Obviously, it’s going to take time for the US labor market to recover, but for now, the least we all can do is support one another, and continue to demand that the government does it’s job to protect its citizens.