RSG COVID-19 Economic Response Team →

The Post-Pandemic Housing Market

House with a Rent Sign

June 23, 2021

By Alejandra Martinez, Research Assistant

Families throughout the U.S face the looming threat of eviction and foreclosure as the sunset date of nation- and state-wide eviction moratoriums approaches. For California, June 30th will mark the official end to tenant protections for renters that have been unable to pay rent throughout the pandemic, and small property landlord and homeowners missing mortgage payments will have to endure limited federal and state support.

While the circumstances behind this ongoing housing crisis are distinct, it has become apparent that what we are contending with will be a housing market very similar to what followed the Great Recession. Swaths of homes will be up for sale, decades of generational wealth will be lost, and families will have to start the housing journey from scratch. And like they lay in wait in 2008, Wall Street corporations today are ready to expand their property holdings and take ownership of the hundreds of thousands of housing units that are coming onto the market. 

Following the Great Recession, Wall Street corporations spent over 60 billion dollars purchasing swaths of single-family homes that were then converted into rental units. While families and landlords lost properties to foreclosure, investors were rapidly transferring homes into the rental market, further restricting an already limited housing supply and constricting homeownership opportunities. As the economy recovered, these new landlords were thus reaping the benefits of increasing home values while their tenants faced increasing rents and potential homeowners were pushed out of the market. Considering the clear parallels we’re seeing in today’s housing market, it is a valid concern that these same corporate actors may distort our housing markets as we recover from the economic impacts of the COVID-19 Pandemic. The same vulnerabilities of 2008 are present here today. In addition, states like California continue to face a mounting housing crisis that has only been magnified by the pandemic.

Despite these challenges, the housing market has seen a notable rebound throughout the pandemic. Mortgage applications for new home purchases increased 33 percent compared to a year ago in August of 2020 amidst record-level unemployment rates. However, these hopeful figures and increasing home prices are not just a result of growing demand from potential homeowners; they also reflect the perpetual scarcity of housing. From 2010–2019, the United States had the lowest number of homes built in any decade since the 1960s. Factoring in Wall Street’s expanding venture into real estate following the Great Recession, the supply available to a typical homebuyer continues to dwindle even as the market booms.

Today, large real estate investment companies own one in four single family rentals across the country, and that figure will grow. As a Reuters article details, Invitation Homes—a publicly traded real estate investment trust and the largest owner of single-family homes—is seeing record growth amidst the pandemic. Not only has their share price nearly doubled since March 2020, but they are ready to spend $1 billion this year to grow their housing portfolio. This is what potential homeowners are up against as we emerge from one of the most devastating crises of the century. For renters and homeowners alike that will continue to face evictions, foreclosure, and bankruptcy, the quest to establish generational wealth through homeownership has only become all the more arduous.