The American dream comes in dozens of variations, and my version of it certainly isn’t the standard. Your mileage may vary (YMMV) as they say on social media. However, having hopped from South Florida to Hawaii to California to New York City in the past six months, my answer to the above question is no. Today’s real estate market does not represent the American dream, except perhaps for a few salespeople raking in commissions and tech investors watching proptech stocks finally skyrocket. It’s busy and fast paced, competitive and unpredictable, but that is not the sustainable formula for a dream. It’s exhausting.
Why is the residential market so heated?
Residential real estate continues to confound all early-Covid19-era predictions, thanks to incredibly low interest rates and buyers driven by an urgent need to move/consolidate/protect/refinance their lifestyles. For most people, the level of uncertainty around employment, family health, education, and socioeconomic standing is what’s causing them to sell one place and buy elsewhere. This isn’t the stuff of dreams though; it’s "Why should I stay in this expensive city if my husband is on furlough and I can work from home indefinitely?" Or, "Why should we pay a premium to stay in a so-called good neighborhood if schools are closed and restaurants and parks are unsafe?" Others are moving to be closer to their aging parents -- sometimes even to move into the same house as them -- or because locked-down cities with skyrocketing infection rates no longer feel like the safest place to raise a family.
It’s true, because of this shift in housing priorities, combined with the government-backed mortgage forbearance and eviction moratorium, there has not been a flood of primary homes coming on the market. Indeed, many states are reporting fewer listings than ever before, thanks to an exodus from former white-collar hub cities. But this isn’t a dreamy condition for either the existing residents or the newcomers. Prices are higher than normal in many cases, and people are making rushed, even panicky buying decisions. And, while industry shifts such as virtual walk-throughs and drive-up appraisals might seem convenient in the moment, there will no doubt be a flood of lawsuits upcoming as buyers come to discover all the things that went undisclosed about a property that they bought unseen and without due diligence.
The first cracks to show in a shiny facade...
For short-term rental investors, their rental properties are first to go, as six-plus months of a soft market prove too much for overextended finances. For those who aren’t in such bad shape, the question becomes, how long can they weather uncertainty and turbulence? In seasonal getaways, landlords have to try to balance profit forecasts for peak travel season with shutdown potential in the event of a winter Covid-19 spike. And in year-round destinations like Florida and Hawaii, it doesn’t matter whether safety measures are rigorous or practically nonexistent -- occupancy still isn’t high.
Meanwhile, the dearth of medium-income housing and workforce housing continues to be a huge area of concern, and even a spate of fast-tracked, city-backed development catering to this demographic will not assuage the urgent need.
Without a doubt, plenty of real estate brokers, property owners and contractors are busier than they’ve ever been before. There are opportunities for quick sales and sales that seem easy in the moment. There is a sense of urgency… but not excitement. Rather it’s the need to make a move before an axe falls in the place previously occupied. Landlords, lenders, and property managers have been thinking for months about the most efficacious ways to clear nonpaying occupants out of their homes. Add in the threat of a second wave of illness -- or is it a third? Or still the first? Regardless, it looms over the winter.
Looking at the full picture, this isn’t a comfortable scenario for most people, nor a happy one, nor sustainable. The market might be busy, but it's not anyone's idea of an American dream, aside from those who are brokering deals on the back of everyone else’s anxiety.