Like so many others, Kevin Martin has spent the last few months cooped up at home. He lives in Dunkirk, New York, where he teaches business and economics to grape growers through a program at Penn State University. For now, he’s set up shop in his kid’s nursery. His wife, Heather, who works in human resources, telecommutes from the dining room table.
“Everything seems small when you start filling up the house and staying there all day,” he said.
So, the Martins started shopping for more space and just made an offer on the house right next door. The plan is to build an addition onto the current house and tear down the new one for the extra footprint.
If that sounds extravagant in the midst of an economic downturn, the new house was abandoned. The Martins are paying $19,500. And though they’re both still employed, Martin said it is a risk.
“We’re both definitely really nervous about that, and kind of tapping the emergency fund is a little terrifying right now. But we’re not in the same reality that a lot of other people are in,” he said.
Despite the pandemic and an uncertain economy that’s shed more than 33 million jobs, enough people are feeling confident (enough) that the housing market has been showing signs of recovery recently. Mortgage applications for home purchases have risen three weeks in a row, according to the Mortgage Bankers Association. After falling off a cliff in mid-April, pending sales have also inched up, said Skylar Olsen, an economist at Zillow.
“The housing market is trying to pick itself up after going through what I think all industries have gone through, which was an incredible pullback and reaction to uncertainty and [the] sheer logistical challenge of doing work that has traditionally been so face to face,” she said.
Part of the rebound, she said, is just people figuring out how to buy homes, when so much business has gone virtual.
Another factor is interest rates, said Odeta Kushi, deputy chief economist at First American, a title insurance company. The average for a 30-year, fixed-rate mortgage is hovering around 3.3%.
“For those that do still have a job, it’s actually a good time for them to buy,” she said. “The affordability is, is actually higher given those low mortgage rates.”
If you can get them, that is. With millions of existing homeowners delaying their mortgage payments through forbearance, risk-averse lenders have been tightening their credit standards for new loans. That could be another drag on what’s expected to be a slow recovery.
COVID-19 Economy FAQs
With a slow vaccine rollout so far, how has the government changed its approach?
On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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