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More Space, Please: Home Sales Booming Despite Pandemic, Recession

Caroline Wells and her family at their new home outside San Antonio. The builders just finished it so the yard has yet to be planted, but the couple are looking forward to letting the kids run out their energy with a lot more outdoor space than they had at their home in the city.
Caroline Wells and her family at their new home outside San Antonio. The builders just finished it so the yard has yet to be planted, but the couple are looking forward to letting the kids run out their energy with a lot more outdoor space than they had at their home in the city.

For months after the pandemic hit, Caroline Wells and her husband were working remotely from their home in San Antonio while trying to ride herd on their two young children. She says the house has basically no yard, and it's on a busy street. So sending the kids outside to play was not happening.

"Probably the worst moment was when I was actually on a focus group that my company put on to hear the needs of parents," Wells says. The Zoom call kept freezing because everyone in the house was using the Wi-Fi at the same time— including her 6-year-old son, who was hiding out in a fort made of blankets and chairs in the living room.

"I had to crawl into the fort to get him off the Internet, had to end up finishing the Zoom call on my cellphone in the closet with the door locked on the floor," Wells says. "I was like, I can't even get through a focus group about how hard it is to work from home because it's so hard to work from home!"

That was the moment she decided: "I can't do this."

That's a big part of what's driving home sales right now — people want more space.

Despite the steepest plunge into a recession on record, historically high unemployment and an uncertain outlook for the economy, the housing market is on a tear.

"The home sales are quite remarkable, given that we are still in the midst of the global pandemic," says Lawrence Yun, chief economist for the National Association of Realtors. He says after falling off a cliff in the spring, home sales have now more than recovered.

Sales of previously owned homes have climbed back up after dropping this spring when the pandemic hit. Sales jumped nearly 25% in July to a seasonally adjusted annual rate of 5.86 million.
/ National Association of Realtors
Sales of previously owned homes have climbed back up after dropping this spring when the pandemic hit. Sales jumped nearly 25% in July to a seasonally adjusted annual rate of 5.86 million.

In June, sales of existing homes jumped more than 20%, a record. Then they broke that record in July with a nearly 25% gain. Yun says the pace of home sales is now up about 9% from a year ago, and the median price for homes and condos has hit a new record of $304,100.

The boom looks likely to continue. This week, the Realtors group said pending home sales remain on the rise.

Yun says low mortgage rates are certainly a driving force — those have also been breaking records. But he says people working remotely and wanting more space is a big factor, too.

In Wells' case, she and her family started looking at houses in the suburbs outside San Antonio. They offered more than the asking price and still got outbid on the first house they liked. But they found another, put in an offer, and they're buying it for $376,900. It's a four-bedroom, single-family home on almost 2 acres on a quiet cul-de-sac with a big yard for the kids.

Prices for previously owned homes have been rising steadily, hitting a record median $304,100 in July, up 8.5% from a year earlier.
/ National Association of Realtors
Prices for previously owned homes have been rising steadily, hitting a record median $304,100 in July, up 8.5% from a year earlier.

Wells says she's looking forward to turning the kids loose in the yard since, up until now, "we're just putting on movie after movie to keep them entertained so we could work."

The housing boom is a sign of what a strange recession this is. Millions of Americans are out of work and in desperate financial shape. The unemployment rate at 10.2% is still just about as high as it's ever been since the Great Depression. Twenty-seven million people are collecting unemployment at last count. But many other people are working remotely and saving a lot of money because they're not spending it on restaurants or plane tickets for vacation.

Rates for 30-year fixed-rate mortgages are near historical lows, falling to 2.91% in the week ending Aug. 27.
/ Freddie Mac
Rates for 30-year fixed-rate mortgages are near historical lows, falling to 2.91% in the week ending Aug. 27.

Homeownership rates for African Americans and Latinos, which lag those of whites, fell sharply after the housing crash a decade ago, but Yun says before the pandemic they were starting to recover.

Cesar Escobar is a housing counselor in Chicago at the Northwest Side Housing Center, a nonprofit that offers classes to many minority homebuyers. "There's a lot of bungalows, homes," Escobar says. "Once you have a family, this is a good neighborhood to live in."

And Escobar says the Zoom call homebuying classes are full and the desire to stop paying rent to a landlord and become a homeowner is alive and well. "If I'm paying this much in rent, I might as well just buy a house," he says many clients tell him. "They want to build their equity; they want to have something in their name or for their kids."

Because so many people are trying to refinance or buy a house, the mortgage system can get overloaded right now. That caused a snag for Wells and her family in San Antonio.

She and her husband didn't want to close on the new house until they sold the old one. And she says the people buying her old home had their loan unexpectedly get stuck in a backlog for weeks.

Wells and her family had moved out, put just about all their belongings in storage and ended up staying with family. And this week they were stranded in a hotel waiting for that loan approval.

"Every day is like another sad text or call from our Realtor, 'No news guys, like so sorry,' " she said earlier this week. She says it's been "lots of sleepless nights, lots of wondering if it's all worth it but trying to be hopeful."

But the hope paid off. Wells now says the sale just went through and they can move into their new house. So the kids can build a new fort, this time in the backyard.

Ashish Valentine contributed to this report.

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