BloombergBusinessweek August 31, 2020household bills, came to an end last month, and
Congress can’t agree on a replacement. President
Trump signed executive orders earlier this month
that may deliver as much as $400 in supplemen-
tal benefits for those still out of work, but the relief
may not last more than a month, analysts say.
Unless the economy comes roaring back to
life soon, the unemployed may be forced to sell
their homes for a loss or face foreclosure. They’re
allowed to delay mortgage payments under a for-
bearance plan for up to a year. Six of the biggest
U.S. banks, including JPMorgan Chase & Co. and
Wells Fargo & Co., have already boosted reserves
to $35 billion, bracing for a tsunami of soured loans.
Buyers who purchased recently and have little
equity in their homes are the most vulnerable if
housing crashes again. In the Inland Empire, many
stretched into homeownership using programs such
as Federal Housing Administration loans, which
require small down payments and allow borrow-
ers to take on more debt with less income. Almost
16% of borrowers with FHA loans in the U.S. were
delinquent in the second quarter, more than twice
the rate for conventional loans, according to the
Mortgage Bankers Association.
The migration away from cities will last until
the virus is gone, and longer if employers get com-
fortable with having a remote workforce, saysRalphMcLaughlin,chiefeconomistforHaus,a
co-investment platform for homebuyers. “We’re
seeing a very radical change in where people want
to live—if it’s temporary, the fortunes of suburban
areas may not be as rosy as some people think,” he
says. “If it’s permanent, we may see a new wave of
suburbanization like we haven’t seen in decades.”
At ShadeTree, many of the shoppers are first-time
buyers leaving high-cost rentals in coastal towns
such as Irvine or Newport Beach and who lack cash
for a big down payment, but can afford FHA loans
to finance homes that start at around $500,000,
according to Landsea’s Forsum. “It feels counterin-
tuitive that our industry is experiencing the kind31TheInlandEmpireareainRiversideandSan
Bernardino counties, home to 4.5 million, has
long been a land of booms and busts. Previti lived
through that roller coaster, when a bubble inflated
by loose lending, speculation, and overbuilding
burst, unleashing a massive wave of foreclosures.
The price for a typical single-family home in the
area plummeted 60% in last decade’s crash. But it
jumped 10.5% in July, to $420,000, which is almost
10% above the 2006 peak. Previti’s sales pace last
month was three times as high as in July 2019.
Bidding wars are breaking out again in the
region, which has long been the affordable alter-
native to the coast, a place where buyers put up
with desert temperatures and hellish commutes for
a home that costs a fraction of similar real estate in
Los Angeles, Orange, or San Diego counties.
The orange groves and dairies that once blan-
keted the Inland Empire are being supplanted by
sprawling red-tile-roof subdivisions. People started
lining up at noon on Friday, Aug. 14, as the ther-
mometer climbed to 104F, 22 hours before 40 lots
were released at ShadeTree, a community in San
Bernardino County just launched by Chinese builder
Landsea Homes. The line swelled to more than 30
buyers, who camped overnight and shielded them-
selves from the sun with umbrellas. The demand
seems “unprecedented to me, especially in light of
the fact that it is the middle of August—traditionally
a dormant time period for sales,” says Mike Forsum,
Landsea’s chief operating officer.
Simultaneously, however, the U.S. property
market is facing another test. The federal govern-
ment’s $600 weekly supplement to unemployment
insurance, which helped millions of homeown-
ers weather job losses and pay mortgages and◀ Prospective buyers
line up at ShadeTree,
a new subdivision in
Ontario, Calif.◀ Jason Alonzo and his
wife, Rebecca, snagged
a five-bedroom,
$680,000 house at
ShadeTreeEscape From L.A.