The Indicator from Planet Money - Why The Housing Market Is Booming In A Bad Economy

The coronavirus pandemic has brought with it a massive economic downturn. Another thing it's brought: A booming housing market. We explain why. | Support The Indicator here.

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Content Keywords: interest rates indicator Glenn part Stacey Vanek Smith
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what is the indicator from Planet Money? I'm Stacey Vanek Smith. And I'm part of course she up, even though large parts of the US economy have cratered this year. One of those surprising success stories of the coven economy has been the housing market. In fact that there has been a boom in housing throughout the year. And when we first noticed this was happening, we called up Glenn kelman the CEO of Redfin in online real estate brokerage and we're wearing part of that episode today back. Then when told us that one that you cannot make Fallout covid-19 demand also crashed and he assumed Redfin was in for some lean years. That's not what happened at all or hiring hundreds of people and we're saying there's unemployment. There's people protesting in the streets or social unrest there's a second surge of infections. Should we really hire more real estate agents?

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Any answer so far has been yes because there's just so much demand. There's so much demand is traffic on redfin's website is up 40% and Realtors are so overbooked that they actually turning customers away, which is pretty mind-blowing if you consider the unemployment rate in the US right now is the worst it's been since the Great Depression. This is the indicator from Planet Money. I'm Stacey Vanek Smith and I'm Carlos Garcia turn 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.

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This message comes from NPR sponsor avalara, providing cloud-based sales tax Solutions for businesses of all sizes. Aveleyra automatically integrates with more than 700 E R P & D Commerce system. Learn more at avalara. Com indicator 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. What about the the commute to work? Yes, it's sold real estate Mantra right time immemorial location location location. Most of the time those locations were big cities were most of the jobs were concentrated and as a result buying a home in the city's had become a kind of Bloodsport. The New York real estate market is San Francisco real estate market. These were insane markets where they were bidding wars with 20 30 40

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Glenn says smaller cities rural areas for a different world. In fact over the last few years housing sales have been a little sluggish and there was a bunch of speculation about why Millennials are buying houses. And what was going on that has changed the National Association of Realtors announced it from May to June just isn't covid-19 crisis was bearing down on businesses and millions of people losing their jobs pending home sales Rose more than 16% That's the biggest monthly rise on record that is crazy to me because you know, like one in every five Americans. Unemployment like blowing my mind that homeownership rates might also be going up with it. There's a kind of a real estate boom, but it sounds like there is well, it's white-collar professionals were able to work from home in some ways. This is a sign that the economy is just officially split into you have people who were worried about unemployment benefits running out and at the same time.

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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 the time it's not a crisis. It's just a sale sign says that for the people who were lucky enough to have kept their jobs and huge number of them are working from home. Now that's changed everything the traffic to listings that are in town two populations of less than 50,000 people is up 87%. It's more like space space space 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, San Francisco and New York apartments that used to have 40 people in a bidding war people have been leaving those places in droves.

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Tony Zapata and her husband moved to San Francisco about seven years ago. One of those overpriced apartments in San Francisco, but a couple of months ago Tanya and her husband noticed that a lot of people were moving out of their high-rise. I started seeing a lot of people moving out of the building and her husband started to think maybe they have the right idea and they started looking around on the internet and then one day my husband saw this house and not by which is in the middle of Vineyard and and the house is so beautiful cuz you have Vineyards around the house. It has stays with fruit trees and also, you know, I got raised beds for for growing your own vegetables.

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So we were like well, this is amazing. Let's go to Napa but it had more than three times the amount of space Also their parents could move in with them that has big yard and all this land for their daughter to run around that Glenn. Kehlmann. Co Redfin, he says people are making Tanya's calculation everyday now paying the same amount of money that they were paying in advance City, but getting way more space for double he is seeing a lot of requests for extra bedrooms for parents and grandparents and request for extra rooms for offices and Home Gyms. 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 inspect. He says this is what he found it Redfin when he surveyed his staff about coming back to the office.

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Just 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 14% 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. 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? Meanwhile, she and her family have been settling into their new life in wine country and so far she is not miss the city at all. I remember the day that we moved here. We're getting off the car and my daughter asked me do I need to get out the car with a mask? And no you don't have to this is our home now.

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I don't know. I mean, we'll see it. We'll see how things turn out within the year you're going to have to but so far. I'm so happy. So happy that we moved.

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This episode of the indicator was produced by Camille Peterson fact-checked by Britney Cronin. The indicator is edited by Patty Hearst and is a production of NPR.

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Does your economy seems sluggish are you interest rates feeling abnormally low your economy might be exhibiting symptoms of a once-in-a-lifetime recession ask your podcast provider about a twice-weekly dose of Planet Money. The economy can be protecting NPR Planet. Money can help.
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