Bloomberg Businessweek - USA (2020-08-31)

E C O N O M I C S

30

Edited by

Cristina Lindblad

HomebuilderJimmyPreviti’ssaleshaven’tbeen

thisstrongsincethelastdecade’shousingboom.

Andthatmakeshimnervous.

Hishometurf,theInlandEmpire, 45 milesfrom

LosAngeles,is atthecenterofa suburbanlandrush.

IntheCovid-19era,thesingle-familyhousesthatare

thestockintradeforPreviti’sFrontierCommunities

area hotcommodity.Abettedbythelowestmort-

gageratesinhistory,buyersareincreasinglyshun-

ningmoredenselypopulatedareas,settlinginstead

wheretheycanliveata safedistancefromtheir

neighbors.“Isthisthelittlerunupbeforeeverything

runsofftherails?”asksPreviti,chiefexecutiveoffi-

cerofFrontier.“Nobodycantell.”

Thesuburbanbuyingfrenzy,drivenbyurban

exileshuntingforhomeofficesandspacetoquaran-

tineincomfort,comesontheheelsoftheU.S.econ-

omycontractingatitsfastestrateeverinthesecond

quarterandtheunemploymentratealmosttripling

froma yearearlier.U.S.policymakershavekeptthe

housingmarketafloatbyfreezingforeclosures, cut-

ting borrowing costs, and flooding the economy with

stimulus cash. Nationwide, sales of new single family

homes soared 36% in July from the same month last

year, reaching their highest level since 2006.

How long the surge in demand lasts will depend

on the path of the virus and what happens once the

rescue plans expire. “We’ve delayed the crash, but

at the same time we’re inflating the boom,” says Ed

Pinto, director of the housing center at the American

EnterpriseInstitute,a thinktankinWashington,D.C.

The exodus to sparser landscapes is happen-

ing across the U.S., but it’s most dramatic out-

side pricey, crowded New York, Los Angeles, and

San Francisco. In Manhattan, signed sales con-

tracts for condos and co-ops in July fell 60% from a

year earlier. Meanwhile, in the northern bedroom

communities of Westchester County and Fairfield

County, Conn., deals for single-family homes dou-

bled, according to appraiser Miller Samuel Inc. and

brokerage Douglas Elliman Real Estate. The num-

ber of sales in San Francisco last month inched up

1.4%, but they leapt 36% in the upscale suburbs of

Marin County and 15% in the more affordable ones

in Contra Costa County, according to the California

Association of Realtors.

Price growth slowed from pre-lockdown levels in

urban sections of Boston, Detroit, and Washington,

D.C., but they accelerated in their suburbs, accord-

ing to an analysis by Zillow. Home prices in Boston,

for example, rose 2.1% in July while they climbed 5%

in the suburbs. In Washington, they rose 3.6% and

increased 4.4% farther out.

DATA:

CALIFORNIA

ASSOCIATION

OF

REALTORS;

PHOTOGRAPHS BY MOLLY PETERS FOR BLOOMBERG BUSINESSWEEK

Land of Boom and Bust

Median price of existing single-family homes in the Inland Empire

● AnexodusfrombigU.S.cities

could push up prices in some

suburbs to unsustainable highs

Escape From L.A.

7/2000 7/2020

$400k

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