The post-Covid housing epidemic – Times Gazette
COVID-19 has not been kind to tenants. Moratoriums on evictions have been a mixed blessing with pervasive political overtones. Homeowners with heavy mortgages experiencing job losses and time off have had similar troubling experiences, but at least in these cases, government intervention has allowed monthly payments to be suspended for up to 18 months with options for avoid compensating for these payment delays over several decades.
Who knows for sure what comes next for these people? Will there be future waves of the mutant virus? Will there be more mortgage and eviction consequences? It is almost certain that these changing circumstances will make times more stressful as families try to anticipate and plan for the future, no matter what.
However, when it comes to the housing market, there is a more fundamental and seismic change of scale.
Not so long ago, as president of a homeowners association in Columbus, I had to deal with an emerging and troubling trend. The homes were purchased as part of the association’s development by “outsiders”, whose sole intention was to offer their purchased homes as Airbnb accommodation opportunities.
Our housing association was near Ohio State University and the Muirfield Country Club. Airbnb visitors were always interested in OSU games, PGA golf events, weddings and family reunions, which meant these homes would be revolving doors for collections of people with no allegiance to the neighborhood, its alliances, to his behavior or his decorum.
Fears of noise, parties, loss of local control and falling property values prompted our association to quickly change its statutes to avoid such events in the hope that the changes would be valid before the courts. courts. But this example is probably only symptomatic of what will happen in a new globalized housing market.
Consider this: A builder in the Dallas-Fort Worth area was planning to build 1,500 homes, offering investors types 100 homes. As reported in an article in USA Today, the builder told a real estate agent that on day one there was such demand that it had sold 190 homes and Chinese nationals were among the top buyers. As foreign buyers put it, according to an article in this newspaper, “China is followed by Canada, India, Mexico and the UK as the biggest investors… (and) economists say we need to expect to compete with these buyers, especially since a large percentage of foreign buyers tend to bid while cash pushing up home prices.
Sometimes these “foreign” investors come from other states. The pandemic has fueled a tendency for buyers in large urban areas to buy homes in rural areas, waterfronts, and ski and vacation areas. Why? And how are they paid? In an alarming number of cases, the answer is Airbnb.
Think of an Indian investor, for example, who purchases a beautiful home near the slopes in Vail, Colorado. For him, it’s not a house in itself, it’s an asset. It might be a nice place to vacation one week once every two years, but the business proposition is that the investment is paid for by Airbnb tenants. With incredibly low interest rate mortgages, assets go up. It’s like investing in a high quality, high yield bond that will pay off 15 years from now. But these “foreign” buyers, whether from Mexico or Massachusetts, are driving up demand and prices for homes across the country, and there’s a good chance that will only increase.
CNN Business recently ran an article titled “Wall Street Buys Houses. Rent checks are too juicy to ignore. Its content quoted John Burns Real Estate Consulting as saying, “In the first three months of this year, nearly a quarter of all homes sold in the United States went to investors.” It’s true, overall, that institutional investors make up a relatively small percentage of single-family rentals today, but add individual investors and the trends are notable.
Proof that this is becoming a global phenomenon, in the UK, according to investment manager Schroeders, “the proportion of households owning their home has risen from a peak of 70% in the early 2000s to around 63% in the pass. five years.
When I asked my son, who has experience in banking, wealth management and the technology that drives this new housing phenomenon, about it all, his response was, “What makes the Particularly hot market is the fact that the pandemic is pushing metropolitan buyers to work more remotely, and low rates mean investors are looking for a yield elsewhere, so pooled rental housing, just like pooled mortgages, looks good. Moreover, the most important dynamic is the backdrop of technology and its role in its unfolding. Being able to list, update and manage a rental home remotely has been a game-changer, and short-term rental income far exceeds long-term rental income. This has made every home an attractive target for producing returns, and it drives up home prices for everyone. Airbnb offered the public an alternative to hotels, which for the most part erased all zoning laws in place around hotels. A business, or even a distant owner, is a very different type of neighbor.
When Airbnb becomes an asset investment vehicle and when Wall Street companies want to get into the lucrative home rental business, that’s not a good trend for individual homebuyers in America.
The pandemic has changed individual and institutional views on what to own, where to own and how to make money in this changed tax environment.
If all of this seems far and far from Highland County, Ohio, COVID-19 did it not too long ago. The future, as the car’s rearview mirror says, is closer than it looks.
Bill Sims is a Hillsboro resident, retired chairman of the Denver Council on Foreign Relations, author, and runs a small farm in Berrysville with his wife. He is a former educator, executive and founding president.
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