FALLS CHURCH NEWS-PRESS | FCNP.COM
R EA L E STATE
R��� E����� W����� 2021
Housing Market Ripe for 1st-Time Buyers, But Could Worsen Inequality
BY MATT DELANEY
WINTER 2021 | PAGE 11
FALLS CHURCH NEWS-PRESS
Analysts have claimed that the housing market will be a major player in the post-Covid economic recovery — and by and large, they’re right. But while some firsttime buyers are well-positioned to break into notoriously competitive markets such as the Washington, D.C. region’s, those who’ve struggled financially thanks to the virus may find themselves priced out once they regain their footing. Home sales are a positive gauge for an economy because, as John Walsh from the Urban Institute’s Housing Finance Policy Center
said, people will commit to their life’s most expensive purchase when they have the money to do so. That demand creates a multiplier effect — more people wanting homes means there’s more interest in building them, helping those in the construction industry as well as those with jobs at utility companies. And it keeps real estate agents busy with selling homes and mortgage loan companies active by helping people finance them. “Especially when you’re building homes, you’re hiring labor and buying everything that you’ll need for that home,” Walsh said. “You’re inspiring different pieces of the economy and funding them when
you build a home.” This is a change from how the Great Recession unfolded. Back then, the generosity of mortgage companies to default-prone clients facilitated the decline and damaged a traditional pillar of an economic recovery. Just like how Walsh explained housing sales have a multiplier effect in a positive way, it can also be negative — for example, the housing collapse made employment growth in the construction industry stagnate for nearly four years, as Bloomberg News noted. Less construction workers meant less housing being built, which created inventory challenges and made for a tighter mar-
LOWER PRICED homes in the City of Falls Church often get bid above their list price, removing starter homes for prospective buyers. But historically low mortgage interest rates introduced to fight the economic consequences of the pandemic have added more options for first-time buyers. (P����: N���-P����.) ket overall. Harvard University’s Joint Center for Housing Studies said that lower interest rates inspired by recessions (in this case, historically low rates below three percent) reduces borrowing costs for both homebuyers and builders, which makes homebuying more attractive
and spurs homebuilding. Again, it’s that multiplier effect in action. Northern Virginia’s market has been no stranger to this trend. After the spring lull, sales began heating up in June and haven’t slowed since, according to Northern
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