Projected US Real Estate Slump May Help Young Home Buyers

In this April 27, 2019, photo, Andy and Stacie Proctor stand in front of their new home in Vineyard, Utah. For some millennials looking to buy their first home, the hunt feels like a race against the clock. The Proctors ultimately made a successful offer on a three-bedroom house for $438,000 in Vineyard. (AP Photo/Rick Bowmer)

“We know that over 30 million people have lost their employment over just the last five, six weeks or so,” Lawrence White, professor of economics at New York University Stern School of Business, told VOA.

WASHINGTON, D.C. May 17, 2020 (Esha Sarai, VOA) — While unemployment climbs to the highest rate in the United States since the Great Depression of the 1930s, experts predict that real estate prices may decline and not recover for years. “We know that over 30 million people have lost their employment over just the last five, six weeks or so,” Lawrence White, professor of economics at New York University Stern School of Business, told VOA. “That means a weak market. That’s got to mean lower prospective transaction prices.”

But for young people and others who have maintained good financial standing, the market may afford a unique opportunity to buy their first homes. Even now, some millennials are taking advantage of lowered interest rates and motivated sellers — even if they are technically out of work. “A lot of it was just budget,” said Stephanie Nusbaum, 30, who recently purchased her first home with her husband in Asheville, North Carolina.

Nusbaum and her husband have been furloughed from their jobs, meaning they maintain their health insurance and the promise of eventually going back to work, though they do not have an income now. But they said that between their savings, a stimulus check from the government of $1,200 per person, and unemployment benefits, they are confident that buying was the right decision for them.

“Our mortgage payment is actually less than our rent payment that we were making,” Nusbaum said, noting that their parents helped them with their down payment. Millennials are often criticized and stereotyped for not buying homes or following other social norms of their parents’ generations. But some real estate agents say they have noted that young buyers are just more cautious about making an investment unless they are sure it will be worth it.

“They came of age during a time where economically, it was very difficult,” said Tanya Salseth, a real estate agent in Washington, D.C., referring to the 2008 financial crisis. “And for that reason, I think they are almost better in tune with sort of the financials of a purchase, right? So, they are really looking at numbers, and they asked a lot of questions about, well, what is this property? What can it rent for?”

Defying all stereotypes, Courtney DeGennaro Robinson just bought her second home in Asheville, North Carolina, during the pandemic. “The thing a lot of our peers don’t necessarily realize is that it’s not necessarily as unattainable as we sometimes feel like it is,” she said. “When we started the process for our first home, I thought with our credit and our income, there’s no way that we’re going to be able to get approved for a loan. But there are actually a lot more programs out there for people our age,” she said, noting state-specific first-time home buyer credits.

Though she did note that buying a house under current circumstances was a bit different from her first experience. “There were a lot of anxieties around, like, are we going to be able to have movers help us move? Our original plan was to just have friends and family come over and help us move our belongings and that became … not an option,” she said.

Though there are many questions around how the COVID-19 pandemic will change the real estate market across the United States, White of NYU notes that a big question will be where people, especially younger first-time home buyers, will choose to buy. He says young home buyers have preferred urban areas to the suburbs where they grew up. “There’s a real open question about whether this trend will continue,” White said.

“Once we’ve made it through this pandemic, are people going to say, ‘Yeah, no, I just don’t want to be in a high-density, urban area. That’s the place where pandemics spread and spread rapidly. I want more open spaces,’” he said. White likened this time to the real estate market immediately after the Sept. 11 attacks in 2001, when many experts predicted that more homes would be purchased away from crowded cities.

“They were predicting there was going to be a … weakening of property values, fewer people wanting to live in the five boroughs, especially in Manhattan, especially in lower Manhattan,” White said. Six months after the attacks, Manhattan’s real estate market regained a sense of normalcy and enjoyed a boom until last year.