2020 and the pandemic has changed a lot for us: online classes, work at home, almost zero travel, no dining in at restaurants, restricted family visits, and wearing masks when out. Movie nights out were impossible, so we had a lot of movie marathons and food deliveries, not much sports to engage in, just walking, a little biking around the neighborhood maybe, nothing indoor. But it’s also a good thing, the situation made us see the essentials of life – faith, food, shelter.
The pandemic has also greatly affected our economy, whether it be job placement, closing down businesses, our spending, even rent in Los Angeles and other counties that rolled through every aspect of our financial industry.
But how has 2020 changed housing prices and affordability in LA? Is it for the good or otherwise? Let’s see below.
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Job disruption in many industries has caused a halt to income flow, no matter which demographic. Whether total layoffs, or having hours cut short, a lot of families has been affected. But those that had been badly hit has to top up paying bills with their savings, worse, borrowing money from family and friends.
Now that things are starting to get normal after vaccine roll-outs and many of us getting immunity, not all can be said to have a normal income flow as before 2020. Many are still struggling with their financial situation.
Health and Economic Implications
Aside from the income flow being affected, medical care is another thing that has been largely impacted. Getting sick with the virus means tapping on insurance, but not having a job made this difficult. From big cities to small towns, regardless of status, skin color, people are affected, it’s in this regard that the government issued a rescue plan to help in immediate economic relief to affected families.
Like a domino effect, a society with less jobs, lesser workers will affect every other aspect of the economy. According to Pewresearch.org, “Among lower-income adults, 46% say they have had trouble paying their bills since the pandemic started and roughly one third (32%) say it’s been hard for them to make rent or mortgage payments. About one-in-five or fewer middle-income adults have faced these challenges, and the shares are substantially smaller for those in the upper-income tier.”
One of the solutions many of us turned to, is to find housing or apartments with lower rents. For those who have bought a house but can’t keep up with the mortgage, it has been tough to forego, even if they have very well calculated the costs of owning a house years before.
In the process, some even moved to different counties, perhaps moved back with family just to make ends meet or find places that would be conducive for working at home. This has an effect with the way rents behaved in urban areas versus suburban or rural areas. As people went to find places in the suburbs, rent increased because of demand.
Perhaps an exception, rents decreased in the affluent counties that make up the San Francisco Bay Area and the Los Angeles area, opposed to the growth seen in the nearby counties: for example, the increase can be seen near the Tahoe area in Placer County (+29.8%) and El Dorado County (+19.6%), Fresno County (+20.5%), Santa Cruz (+15.0%), and regions outside of Los Angeles including Kent County (+15.6%) and San Bernardino County (+12.8%).
This has made buying properties in LA for those who have saved up easier. For example, buying a $600,000 house with a 20 percent down payment at last year’s average rate would mean, one has to pay a monthly mortgage of $2,892, including property taxes and insurance. By today’s rate, the pay would only be at $2,675, saving $217 a month.
Effect: 2020 Changed Housing Prices
The pandemic has greatly impacted a lot of people, to point out – lower income Americans have it worse. Housing has become less affordable for them and many struggled due to unemployment and financial hardship. However, the pandemic also altered rent prices (mortgage as well) across the country – leaving more rural and suburban renters facing substantially higher rents with the exception of counties that make up the San Francisco Bay Area and the Los Angeles area.
The subsidy on rental and unemployment assistance to be granted by the American Rescue Plan and previous assistance will go a long way to lift the burden of paying bills and rent – but it may not be enough. The past year has largely shifted the field connected to cost of living, and that shift will likely affect lower income Americans this year and and probably some years more.