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    Supreme Court Ends Biden’s Eviction Moratorium

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    The ruling followed political and legal maneuvering by the administration to retain protections for tenants. It puts hundreds of thousands at risk of being put out of their homes.WASHINGTON — The Supreme Court on Thursday rejected the Biden administration’s latest moratorium on evictions, ending a political and legal dispute during a public health crisis in which the administration’s shifting positions had subjected it to criticism from adversaries and allies alike.The court issued an eight-page majority opinion, an unusual move in a ruling on an application for emergency relief, where terse orders are more common. The court’s three liberal justices dissented.The decision puts hundreds of thousands of tenants at risk of losing shelter, while the administration struggles to speed the flow of billions of dollars in federal funding to people who are behind in rent because of the coronavirus pandemic and its associated economic hardship. Only about $5.1 billion of the $46.5 billion in aid had been disbursed by the end of July, according to figures released on Wednesday, as bureaucratic delays at the state and local levels snarled payouts.The majority opinion, which was unsigned, said the Centers for Disease Control and Prevention had exceeded its authority.“The C.D.C. has imposed a nationwide moratorium on evictions in reliance on a decades-old statute that authorizes it to implement measures like fumigation and pest extermination,” the opinion said. “It strains credulity to believe that this statute grants the C.D.C. the sweeping authority that it asserts.”Justice Stephen G. Breyer, writing for the three dissenting justices, faulted the court for its haste during a public health crisis.“These questions call for considered decision-making, informed by full briefing and argument,” he wrote. “Their answers impact the health of millions. We should not set aside the C.D.C.’s eviction moratorium in this summary proceeding.”The majority said the issues were fully considered and straightforward. “It is indisputable that the public has a strong interest in combating the spread of the Covid-19 Delta variant,” the opinion said. “But our system does not permit agencies to act unlawfully even in pursuit of desirable ends.”“If a federally imposed eviction moratorium is to continue,” the opinion said, “Congress must specifically authorize it.”In dissent, Justice Breyer wrote that “the public interest is not favored by the spread of disease or a court’s second-guessing of the C.D.C.’s judgment.”The Biden administration and other moratorium proponents predicted that the decision would set off a wave of dire consequences.“As a result of this ruling, families will face the painful impact of evictions, and communities across the country will face greater risk of exposure to Covid-19,” Jen Psaki, the White House press secretary, said in a statement.The ruling also renewed pressure on congressional Democrats to try to extend the freeze over the opposition of Republicans.“Tonight, the Supreme Court failed to protect the 11 million households across our country from violent eviction in the middle of a deadly global pandemic,” said Representative Cori Bush, a Missouri Democrat who slept on the steps of the Capitol this month to protest the expiration of the previous moratorium. “We already know who is going to bear the brunt of this disastrous decision: Black and brown communities, and especially Black women.”But landlords, who have said the moratoriums saddled them with billions of dollars in debt, hailed the move.“The government must move past failed policies and begin to seriously address the nation’s debt tsunami, which is crippling both renters and housing providers alike,” said Bob Pinnegar, the president of the National Apartment Association, a trade association representing large landlords.It will most likely take a while for the backlog of eviction cases in many states to result in the displacement of renters. But tenant groups in the South, where fast-track evictions are common, are bracing for the worst.In recent days, Mr. Biden’s team has been mapping out strategies to deal with the likely loss of the moratorium, with a plan to focus its efforts on a handful of states — including South Carolina, Tennessee, Georgia and Ohio — that have large backlogs of unpaid rent and few statewide protections for tenants.The administration had at first concluded that a Supreme Court ruling in June had effectively forbidden it from imposing a new moratorium after an earlier one expired at the end of July. While the administration had prevailed in that ruling by a 5-to-4 vote, one member of the majority, Justice Brett M. Kavanaugh, wrote that he believed the moratorium to be unlawful and that he had cast his vote to temporarily sustain it only to allow an orderly transition. He would not support a further extension without “clear and specific congressional authorization (via new legislation),” he wrote.Congress did not act. But after political pressure from Democrats, a surge in the pandemic and new consideration of the legal issues, the administration on Aug. 3 issued the moratorium that was the subject of the new ruling.The administration’s legal maneuvering might have failed, but it bought some time for tenants threatened with eviction. In unusually candid remarks this month, President Biden said that was part of his calculus in deciding to proceed with the new moratorium, which was set to expire Oct. 3.Congress declared a moratorium on evictions at the beginning of the coronavirus pandemic, but it lapsed in July 2020. The C.D.C. then issued a series of its own moratoriums, saying that they were justified by the need to address the pandemic and authorized by a 1944 law. People unable to pay rent, the agency said, should not be forced to crowd in with relatives or seek refuge in homeless shelters, spreading the virus.The last moratorium — which was put in place by the C.D.C. in September and expired on July 31 after being extended several times by Congress and Mr. Biden — was effective at achieving its goal, reducing by about half the number of eviction cases that normally would have been filed since last fall, according to an analysis of filings by the Eviction Lab at Princeton University.The challengers in the current case — landlords, real estate companies and trade associations led by the Alabama Association of Realtors — argued that the moratorium was not authorized by the law the agency relied on, the Public Health Service Act of 1944.That law, the challengers wrote, was concerned with quarantines and inspections to stop the spread of disease and did not bestow on the agency “the unqualified power to take any measure imaginable to stop the spread of communicable disease — whether eviction moratoria, worship limits, nationwide lockdowns, school closures or vaccine mandates.”The C.D.C. responded that the moratorium was authorized by the 1944 law. Evictions would accelerate the spread of the coronavirus, the agency said, by forcing people “to move, often into close quarters in new shared housing settings with friends or family, or congregate settings such as homeless shelters.”The moratorium, the administration told the justices, was broadly similar to quarantine. “It would be strange to hold that the government may combat infection by prohibiting the tenant from leaving his home,” its brief said, “but not by prohibiting the landlord from throwing him out.”The case was complicated by congressional action in December, when lawmakers briefly extended the C.D.C.’s moratorium through the end of January in an appropriations measure. When Congress took no further action, the agency again imposed moratoriums under the 1944 law.In its Supreme Court brief, the government argued that it was significant that Congress had embraced the agency’s action, if only briefly.The central legal question in the case was whether the agency was entitled to act on its own. In June, with the earlier moratorium about to expire, the court voted 5 to 4 in favor of the administration, allowing that measure to stand.But that victory was distinctly provisional. Justice Kavanaugh, who voted with the majority, wrote that he had cast his vote reluctantly and had taken account of the then-impending expiration of the earlier moratorium.“The Centers for Disease Control and Prevention exceeded its existing statutory authority by issuing a nationwide eviction moratorium,” Justice Kavanaugh wrote. “Because the C.D.C. plans to end the moratorium in only a few weeks, on July 31, and because those few weeks will allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds, I vote at this time to deny the application” that had been filed by the challengers.The other members of the court did not give reasons for their votes in the June ruling. But four of them — Justices Clarence Thomas, Samuel A. Alito Jr., Neil M. Gorsuch and Amy Coney Barrett — voted to lift the earlier moratorium. Taken together with Justice Kavanaugh’s statement, that distinctly suggested that a majority of the justices would not look favorably on another extension unless it came from Congress.The Biden administration initially seemed to share that understanding, urging Congress to act and saying it did not have the unilateral power to impose a further moratorium through executive action. When Congress failed to enact legislation addressing the issue, the moratorium expired.Under pressure from Speaker Nancy Pelosi and other Democrats and wary of the rise of the Delta variant, the administration reversed course a few days later.The new moratorium was not identical to the earlier one, which had applied nationwide. It was instead tailored to counties where Covid-19 was strongest, a category that currently covers some 90 percent of counties in the United States.Mr. Biden was frank in discussing his reasoning, saying the new measure faced long odds but would buy tenants some time.“The bulk of the constitutional scholarship says that it’s not likely to pass constitutional muster,” he said on Aug. 3. “But there are several key scholars who think that it may — and it’s worth the effort.”Many states and localities, including New York and California, have extended their own moratoriums, providing another layer of protection for some renters. In some places, judges, aware of the potential for large numbers of people to be put out on the street even as the pandemic intensifies again, have said they would slow-walk cases and make greater use of eviction diversion programs. More

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    Evergrande Went From China’s Biggest Developer to One of Its Worst Debtors

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    Regulators want to fix the property sector’s bad habit of borrowing too much. Evergrande, with its billions of dollars in debt, may stand in the way.The company owes hundreds of billions of dollars. Its creditors are circling. Its shares have taken a beating. But if anything forces a reckoning for Evergrande, a vast real estate empire in China, it might be the nervousness of ordinary home buyers like Chen Cheng.Ms. Chen, 30, and her husband thought they had found the perfect apartment. It was part of an 18-building complex in the southern city of Guangzhou, near a good school for their daughter and a new subway station.Evergrande was asking for a deposit worth nearly one-third of the price before the property was completed. After reading headlines about the company’s financial difficulties and complaints about construction delays from recent buyers, Ms. Chen walked away.“We don’t have a lot of money,” she said. “We were really afraid this money would evaporate.”China has a special term for companies like Evergrande: “gray rhinos,” so large and so entangled in the country’s financial system that the government has an interest in their survival. A failure on the scale of Evergrande would ripple across the economy, and spell financial ruin for ordinary households.During the boom years, Evergrande was China’s biggest developer, creating economic activity that officials came to depend on while the country opened up. As more people were lifted out of poverty, home buyers put their money into property. Feeling flush and eager to expand, Evergrande borrowed money to dabble in new businesses like a soccer club, bottled water and, most recently, electric vehicles.Now Evergrande epitomizes the vulnerability of the world’s No. 2 economy. It owes more money than it can pay off, and officials in Beijing want it to slow down. Its stock price has lost three-quarters of its value in the past year, and creditors are panicking. The company has started selling off parts of its corporate empire, but to survive Evergrande needs to keep selling its apartments.The problem is that some Chinese home buyers, once attracted to Evergrande’s developments, have grown increasingly anxious about the company.On China’s internet, buyers describe waiting months or even years for their Evergrande apartments. Some have accused the company of using the pandemic as an excuse for further construction delays.Evergrande declined to comment, citing a “quiet period” ahead of a company earnings announcement.Xu Jiayin founded Evergrande in 1996, as urbanization in China was rising steeply.Paul Yeung/BloombergThe company’s problems have been building for years, but lenders, big investors and home buyers alike are treating it as though it is about to fail. By one estimate, Evergrande owes more than $300 billion. Creditors are not sure it can pay the bills. Business partners have filed lawsuits.Property in China is prone to big swings. Speculative buying propels prices to soar. Local governments then step in to cool things down, sometimes with a heavy hand. Despite the ups and downs, the residential real estate market is still the largest store of Chinese household wealth.For Xu Jiayin, Evergrande’s billionaire founder, the wild ride has mostly followed one trajectory: up.A former steel factory technician, he founded Evergrande in 1996 just as China was embarking on the gargantuan task of moving hundreds of millions of people from the countryside to cities. As property prices climbed with this urbanization, so did Mr. Xu’s wealth.After publicly listing his company in 2009, he began to expand the business into new areas. Evergrande took control of Guangzhou’s soccer club in 2010 and spent billions of dollars on foreign players. It then moved into the dairy, grain and oil businesses. At one point, it even tried pig farming.As the business grew, Mr. Xu was able to attract tens of billions of dollars in funding from foreign and domestic investors and cheap loans from Chinese banks. The success came with strong political connections. A member of China’s People’s Political Consultative Conference, an advisory body to the central government, Mr. Xu is a presence at the most important political gatherings in Beijing every year.His proximity to power also gave investors and banks the confidence they needed to keep lending to the company. Over the years when regulators have stepped in to try to curtail Evergrande’s business, they have usually eased off soon after. By 2019, Mr. Xu was one of the richest property developers in the world.Today his wealth is a little more modest, much of it tied to the company’s stock price, around $18 billion, according China’s Hurun wealth report.“In my opinion, Xi Jiayin is someone who can walk the tightrope really well,” said Rupert Hoogewerf, the founder of the Hurun Report. “He has been able to balance his debt with his growth.”The question for many observers is whether Mr. Xu can continue his careful balancing act as regulators try to shrink the sector’s spiraling debt. When China’s economy began to slow more drastically several years ago, developers like Evergrande found themselves overextended and strapped. To gin up business, they discounted apartments, undercutting the value of properties that earlier buyers paid, prompting street protests.The model of selling apartments before they were completed gave companies the cash they needed to keep operating. That was, until regulators took note of the property sector’s unruly debt, making it harder for developers like Evergrande to finish the apartments they have already sold to buyers.Evergrande took over the soccer club in Guangzhou, China, in 2010 and invested heavily in it —  including a 100,000-seat stadium that opened last year. Evergrande Group, via ReutersFearing a housing bust that would ricochet through China’s financial system, the central bank created “three red lines,” rules forcing property companies to get their debt levels down before they could borrow more money. The aim was to limit the banking sector’s exposure to the property market. But it also took away funds they could use to finish projects.To comply, Evergrande has started to sell off some of its businesses. Last week it sold stakes in its internet business. In public comments, Mr. Xu has pointed to the company’s success in paying off some foreign and domestic investors, reducing debt that incurs interest to $88 billion from $130 billion late last year.But it still has unpaid bills from acquisitions, land-use rights and contract liabilities that add up to hundreds of billions of dollars. Some lenders and business partners have taken it to court to try to freeze assets to get their money back.“On paper it doesn’t make any sense for a company like this to have so much debt. This is not normal,” said Jennifer James, an investment manager at Janus Henderson Investors who estimates that Evergrande has more than $300 billion in debt. Then there are the properties that it took payment for and still has not completed.Wesley Zhang has been waiting four years for an apartment he bought for his parents. Mr. Zhang, 33, paid a $93,000 deposit and has made 41 monthly mortgage payments of nearly $1,100. Local officials suspended the development project in 2018 but later reversed the decision, giving Evergrande the green light to start building.There are no signs of any progress or communication from Evergrande on the apartment he bought. The company is now trying to sell apartments in the complex that promise to be ready to move into by 2023.“It has a huge impact on my life,” Mr. Zhang said. To get his money back, he would have to file a lawsuit against the company to break his contract. “We also need to consider buying another apartment, but the property prices are much higher now.” More

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    Eviction Moratorium Set to Lapse as Biden Aid Effort Falters

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    The administration made a last-ditch, failed appeal to extend the moratorium to buy more time for states to distribute rental aid.A nationwide moratorium on residential evictions is set to expire on Saturday after a last-minute effort by the Biden administration to win an extension failed, putting hundreds of thousands of tenants at risk of losing shelter, while tens of billions in federal funding intended to pay their back rent sit untapped.The expiration was a humbling setback for President Biden, whose team has tried for months to fix a dysfunctional emergency rent relief program to help struggling renters and landlords. Running out of time and desperate to head off a possible wave of evictions, the White House abruptly shifted course on Thursday, throwing responsibility to Congress and prompting a frenzied — and ultimately unsuccessful — rescue operation by Democrats in the House on Friday.The collapse of those efforts reflected the culmination of months of frustration, as the White House pushed hard on states to speed housing assistance to tenants — with mixed results — before the moratorium expired. Hampered by a lack of action by the Trump administration, which left no real plan to carry out the program, Mr. Biden’s team has struggled to build a viable federal-local funding pipeline, hindered by state governments that view the initiative as a burden and the ambivalence of many landlords.As a result, the $47 billion Emergency Rental Assistance program, to date, disbursed only $3 billion — about 7 percent of what was supposed to be a crisis-averting infusion of cash.Adding to the urgency, Justice Brett M. Kavanaugh warned last month, when the Supreme Court allowed a one-month extension of the eviction moratorium to stand, that any further extensions would have to go through Congress. But there was little chance that Republicans on Capitol Hill would agree, and by the time White House officials asked, only two days remained before the freeze expired, angering Democratic leaders who said they had no time to build support for the move.“Really, we only learned about this yesterday,” said Speaker Nancy Pelosi, who had publicly and privately urged senior Biden administration officials to deal with the problem themselves.“What a devastating failure to act in a moment of crisis,” said Diane Yentel, the president of the National Low Income Housing Coalition, which had pressed for an extension of the moratorium. “As the Delta variant surges and our understanding of its dangers grow, the White House punts to Congress in the final 48 hours and the House leaves for summer break.”The federal eviction moratorium, put in place by the Centers for Disease Control and Prevention in November, was effective, reducing by about half the number of eviction cases that normally would have been filed since last fall, according to an analysis of filings by the Eviction Lab at Princeton University.Advocates have argued it is also a public health imperative, because evictions make it harder for people to socially distance.The lapse of the federal freeze is offset by other pro-tenant initiatives that are still in place. Many states and localities, including New York and California, have extended their own moratoriums, which should blunt some of the effect. In some places, judges, cognizant of the potential for a mass wave of displacement, have said they would slow-walk cases and make greater use of eviction diversion programs.On Friday, several government agencies, including the Federal Housing Finance Agency, along with the Agriculture, Housing and Urban Development and Veterans Affairs Departments, announced that they would extend their eviction moratoriums until Sept. 30.Nonetheless, there is the potential for a rush of eviction filings beginning next week — in addition to the more than 450,000 eviction cases already filed in courts in the largest cities and states since the pandemic began in March 2020.An estimated 11 million adult renters are considered seriously delinquent on their rent payment, according to a survey by the Census Bureau, but no one knows how many renters are in danger of being evicted in the near future.Bailey Bortolin, a tenants’ lawyer who works for the Nevada Coalition of Legal Service Providers, said the absence of the moratorium would lead many owners to dump their backlog of eviction cases into the courts next week, prompting many renters who received an eviction notice to simply vacate their apartments rather than fight it out.“I think what we will see on Monday is a drastic increase in eviction notices going out to people, and the vast majority won’t go through the court process,” Ms. Bortolin said.The moratorium had been set to expire on June 30, but the White House and C.D.C., under pressure from tenants groups, extended the freeze until July 31, in the hopes of using the time to accelerate the flow of rental assistance.A crash effort followed, led by Gene Sperling, who was appointed in March to oversee Mr. Biden’s pandemic relief efforts, including emergency rental assistance programs created by coronavirus aid laws enacted in 2020 and 2021.Mr. Sperling, working with officials in the Treasury Department, moved to loosen application requirements and increase coordination among the state governments, legal aid lawyers, housing court officials and local nonprofits with expertise in mediating landlord-tenant disputes.In June, 290,000 tenants received $1.5 billion in pandemic relief, according to Treasury Department statistics released last week. To date, about 600,000 tenants have been helped under the program.But administration officials concede the improvements have not progressed quickly enough. Over the past week, Mr. Sperling; Brian Deese, the director of the National Economic Council; Susan Rice, Mr. Biden’s top domestic policy adviser; and Ms. Rice’s deputy on housing policy, Erika C. Poethig, made a late plea for Mr. Biden to extend the freeze, according to two people familiar with the situation who spoke on the condition of anonymity to describe internal deliberations.Dana Remus, the White House counsel, expressed concerns that an extension was not a legally available option, and other officials suggested it could prompt the Supreme Court to strike down the administration’s broad use of public health laws to justify a range of federal policies, and their view prevailed, the officials said.In a statement Friday evening, Mr. Biden sought to put the onus on local officials to provide housing aid, saying “there can be no excuse for any state or locality not accelerating funds to landlords and tenants.”“Every state and local government must get these funds out to ensure we prevent every eviction we can,” he added.In the past week, Wally Adeyemo, the deputy Treasury secretary overseeing the program, had sent letters to officials in several localities, including New York, warning that their share of the cash could be taken back if it was not spent by mid-September, according to two senior administration officials. The White House is especially concerned about the sluggish pace of spending in Florida.Emily A. Benfer, a professor at Wake Forest University who specializes in health and housing law, said it was not entirely fair to blame the states, because many local governments had to build their rental assistance programs from scratch.It has also been difficult to gain buy-in from landlords, who are required to fill out complex financial forms and follow strict eligibility rules. Some simply do not want to, especially if they have more informal arrangements with tenants. In addition, many landlords and tenants do not even know the aid program exists.Big and small landlords are nearly unanimous in their disdain for the C.D.C.’s moratorium and the patchwork of state and local moratoriums that have augmented it.“They just said ‘You cannot evict and that’s it,’” said Shaker Viswanathan, 65, who owns 16 units in San Diego. “The tenants are the ones that they are trying to take care of, and not anybody else. We still have to make mortgage payments.”If there is one point both tenants and landlords agree on, it is that gaining access to the money remains difficult, and the process must be streamlined.“These applications are just a bear,” said Zach Neumann, a lawyer who runs the Covid-19 Eviction Defense Project in Denver, which has received dozens of calls and emails from renters panicked by the end of the freeze. “It adds a ton of time onto the process and that increases the risk for tenants.”Evictions can be personal crises for all involved — so traumatic, in fact, that many tenants will often leave without resisting just to avoid the ordeal, according to marshals and sheriffs responsible for showing up at people’s doors, hauling out their belongings and locking them out.Kristen Randall, a constable who oversees evictions in the Tucson area, has been reaching out to people on both sides to figure out what happens next.It is a mixed, cloudy picture. Some landlords who are waiting for tenants to get rental assistance are in no rush to evict. Others are planning to take legal action next week to enforce judgments against tenants they have already taken to court.Ms. Randall spent part of Friday visiting renters who faced imminent eviction.“It has been an emotional day,” she said.Ms. Randall repeated what she has been telling those tenants: “When you leave on your own, it is better than me showing up and locking you out.”Ron Lieber More

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    Home Prices Are Soaring. Is That the Fed’s Problem?

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    Low interest rates are one reason that the housing market has taken off. They are far from the only one.Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, has been nervously eyeing the housing market as he ponders the path ahead for monetary policy. Home prices are rising at a double-digit pace this year. The typical house in and around the city he calls home sold for $306,031 in June of this year, Zillow estimates, up from $261,710 a year earlier.Several of Mr. Kaplan’s colleagues harbor similar concerns. They are worried that the housing boom could end up looking like a bubble, one that threatens financial stability. And some fret that the central bank’s big bond purchases could be helping to inflate it.“It’s making me nervous that you’ve got this incipient housing bubble, with anecdotal reports backed up by a lot of the data,” James Bullard, the president of the Federal Reserve Bank of St. Louis, said during a call with reporters Friday. He doesn’t think things are at crisis levels yet, but he believes the Fed should avoid fueling the situation further. “We got in so much trouble with the housing bubble in the mid-2000s.”Policymakers don’t need to look far to see escalating prices, because housing is growing more expensive nearly everywhere. Buying a typical home in Boise, Idaho, cost about $469,000 in June, up from $335,000 a year ago, based on Zillow estimates of local housing values. A typical house in Boone, N.C., is worth $362,000, up from $269,000. Prices nationally have risen 15 percent over the past year, Zillow’s data shows, in line with the closely watched S&P CoreLogic Case-Shiller index of home prices, which rose a record 16.6 percent in the year through May.Bidding wars are frustrating buyers. Agents are struggling to navigate frantic competition. About half of small bankers in a recent industry survey said the current state of the housing market poses “a serious risk” to the United States economy. Lawmakers and economic policymakers alike are hoping things calm down — especially because frothy home prices could eventually spill into rent prices, worsening affordability for low-income families just as they face the end of pandemic-era eviction moratoriums and, in some cases, months of owed rent.Industry experts say the current home price boom emerged from a cocktail of low interest rates, booming demand and supply bottlenecks. In short, it’s a situation that many are feeling acutely with no single policy to blame and no easy fix.Fed officials face a particularly tricky calculus when it comes to housing.Their policies definitely help to drive demand. Bond-buying and low Fed interest rates make mortgages cheap, inspiring people to borrow more and buy bigger. But rates aren’t the sole factor behind the home price craze. It also traces back to demographics, a pandemic-spurred desire for space, and a very limited supply of new and existing homes for sale — factors outside of the central bank’s control.“Interest rates are one factor that’s supporting demand, but we really can’t do much about the supply side,” Jerome H. Powell, the Fed chair, explained during recent congressional testimony.It’s an unattractive prospect to pull back monetary support to try to rein in housing specifically, because doing so would slow the overall economy, making it harder for the central bank to foster full employment. The Fed’s policy-setting committee voted Wednesday to keep policy set to full-support mode, and Mr. Powell said at a subsequent news conference that the economy remains short of central bank’s jobs target.But central bank officials also monitor financial stability, so they are keenly watching the price surge.Demand for housing was strong in 2018 and 2019, but it really took off early last year, after the Fed cut interest rates to near-zero and began buying government-backed debt to soothe markets at the start of the pandemic. Mortgage rates dropped, and mortgage applications soared.That was partly the point as the Fed fought to keep the economy afloat: Home-buying boosts all kinds of spending, on washing machines and drapes and kiddie pools, so it is a key lever for lifting the entire economy. Stoking it helps to revive floundering growth.Those low interest rates hit just as housing was entering a societal sweet spot. Americans born in 1991, the country’s largest group by birth year, just turned 30. And as Millennials — the nation’s largest generation — were beginning to think about trading in that fifth-floor walk-up for a home of their own, coronavirus lockdowns took hold.Suddenly, having more space became paramount. For some, several rounds of government stimulus checks made down payments seem more workable. For others, remote work opened the door to new home markets and possibilities.Reina and David Pomeroy, 36 and 35, were living in a rental in Santa Clara, Calif., with their children, ages 2 and 7, when the pandemic hit. Buying at California prices seemed like a pipe dream and they wanted to live near family, so they decided to relocate to the Boulder, Colo., area, near Mr. Pomeroy’s brother.When Reina and David Pomeroy were ready to give up their rented townhouse and buy, they looked outside California to avoid the state’s high home prices.Ulysses Ortega for The New York TimesThey closed in late July, and they move in a few days. Ms. Pomeroy was able to take her job at a start-up remote, and Mr. Pomeroy is hoping that Google, his employer, will allow him to move to its Boulder office. The pair saw between 20 and 30 houses and made — and lost — six offers before finally sealing the deal, over their original budget and $200,000 above the $995,000 asking price on their new 5-bedroom.Their experience underlines the other key issue driving prices up: “There’s not enough inventory for everyone that’s looking,” said Corey Keach, the Redfin agent who helped the Pomeroys find their home.Home supply fell across the residential real estate market following the mid-2000s housing bust, as construction slumped thanks in part to zoning regulations and tough financing standards. Shortages in lumber, appliances and labor have emerged since the pandemic took hold, making it hard for builders to churn out units fast enough.“The rapid price appreciation we’re seeing is Econ 101 unfolding in real time,” said Chris Glynn, an economist at Zillow.There are early signs that the market might be bringing itself under control. Applications for new mortgages have slowed this year, and existing home inventories have risen somewhat. Many housing economists think price increases should moderate later this year.And while the heady moment in American housing does have some echoes of the run-up to the 2008 financial crisis — borrowing made cheap by the Fed is enabling ambitious buying, and investors are increasingly jumping into the market — the differences may be even more critical.Homeowners, like the Pomeroys, have been more able to afford the homes they are buying than they were back in 2005 and 2006. People who get mortgages these days tend to have excellent credit scores, unlike that earlier era.And a big part of the problem in mid-2000s lay on Wall Street, where banks were slicing and dicing bundles of mortgages into complicated financial structures that ultimately came crashing down. Banks were holding a lot of those inventive securities on their balance sheets, and their implosion caused widespread pain in the financial sector that brought lending — and thus business expansions, hiring and spending — to a screeching halt.Banks are now much better regulated. But that isn’t to say that no financial stability risks hide in the current boom.The home price run-up could also help to keep inflation high. The government measures inflation by capturing the costs of what people are regularly consuming — so it counts housing expenses in terms of rents, not home prices.But a skyrocketing housing market is connected to rising rents: it makes it harder for people to make the leap to homeownership, which increases demand for rentals and pushes rents up. That can matter a lot to inflation data, since housing costs tied to rents make up about a third of one key measure. So what can the Fed do about any of this? Officials, including Mr. Bullard, have suggested that it might make sense for the Fed to slow its monthly purchases of Treasury debt and mortgage-backed securities soon, and quickly, to avoid giving housing an unneeded boost by keeping mortgages so cheap.Discussions about how and when the Fed will taper off its buying are ongoing, but most economists expect bond-buying to slow late this year or early next. That should nudge mortgage rates higher and slow the booming market a little.But borrowing costs are likely to remain low by historical standards for years to come. Longer-term interest rates have fallen even as the Fed considers dialing back bond purchases, because investors have grown more glum about the global growth outlook. And the Fed is unlikely to lift its policy interest rate — its more powerful tool — away from rock bottom anytime soon.Ideally, officials would like to see the economy return to full employment before lifting rates, and most don’t expect that moment to arrive until 2023. They’re unlikely to speed up the plan just to cool off housing. Fed officials have for decades maintained that bubbles are difficult to spot in real time and that monetary policy is the wrong tool to pop them.For now, your local housing market boom is probably going to be left to its own devices — meaning that while first time home buyers may end up paying more, they will also have an easier time financing it.“We felt a little bit more comfortable paying more for the house to lock in low interest rates,” said Mr. Pomeroy, explaining that they could have compromised on amenities they wanted but didn’t.“Interest rates are so low and money is cheap,” he said. “Why not do it?” More

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    Growth Is Strong, but the Obstacles to Full Recovery Are Big

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    The new G.D.P. numbers paint a vivid picture of a nation still struggling to complete an economic readjustment.A house under construction in Culver City, Calif., last fall. Despite great demand for housing, the sector actually contracted last quarter because of supply constraints.Chris Delmas/Agence France-Presse — Getty ImagesMost of the time, a 6.5 percent rate of economic growth would warrant celebrations in the streets. Only in the weird economy of 2021 can it be a bit of a disappointment.It’s not simply that forecasters had expected a G.D.P. growth number that was a couple of percentage points higher, though they did. And it’s not even that America’s output remains below its prepandemic growth path in inflation-adjusted terms, though it is.What makes the new G.D.P. numbers on Thursday feel less than buoyant is the degree to which they reflect a nation still struggling to complete a huge economic readjustment.The report offers some sunny signs, certainly. Growth for the first half of the year easily outpaced the rates mainstream forecasters envisioned late last year, and strong growth in business equipment investment bodes well for the future.But it is an uneven economy — bursting at the seams in some sectors, while still depressed in others. The new numbers show an economy with plenty of demand, but where supply constraints in certain sectors are binding, reducing the overall pace of growth beneath what ought to be possible.Consider the housing sector. The industry is in some ways experiencing a boom, with home prices (and increasingly, rents) rising fast. Yet in terms of the G.D.P. accounting, residential investment became a big negative in the second quarter, contracting at a 9.8 percent annual rate.If builders can’t get lumber, drywall, appliances and the like at prices to “pencil out,” or to make economic sense, they can’t build houses. And so despite extraordinary demand for houses, the sector actually subtracted half a percentage point from the overall G.D.P. growth rate.There was a similar 7 percent rate of contraction in investment in business structures, which probably reflects a mix of supply constraints and uncertain future demand for certain classes of commercial real estate like offices and hotels.Then there are inventories of goods, which subtracted 1.1 percentage points from the second-quarter growth rate. Economists tend to ignore swings in inventories, as they tend not to reveal much about the future direction of the economy. In this case, though, the inventory decline is telling. It is consistent with what businesses are saying about having to draw down inventories as they struggle to keep up with demand (think, for example, of auto sales lots with far fewer cars and trucks to choose from than usual).Meanwhile, the great readjustment in the economy that needs to happen between consumption of goods versus services — although it continued in the second quarter — still has a long way to go.Consider a hypothetical world where the pandemic had never happened, and instead the economy kept growing as forecasters in January 2020 had expected it would, with the various segments of G.D.P. retaining a steady share of the economic pie.Services consumption in the second quarter remained 7.4 percent below the level it would have maintained in that alternate universe, while spending on durable goods remained 34 percent higher.Those are extraordinary shifts in what the economy is being asked to produce, and it is hardly shocking that the physical goods side of the economy would be straining at capacity in light of such an epic reallocation of demand.What has happened in recent months is not Americans shifting spending away from physical goods and toward services, but rather buying more of both, however with varying growth rates. Spending on durable goods rose at a 9.9 percent rate in the second quarter after a 50 percent rise in the first quarter. Spending on services rose 12 percent in the second quarter.Those numbers are, in effect, driving the supply strains for many physical goods.Moreover, the second-quarter data predates the surge in virus cases from the Delta variant. We don’t know yet whether its spread will affect the economy in any meaningful way, but if it does, the likely effects include making supply strains of physical goods worse and slowing the rebalancing of the economy toward services.It would be unrealistic to expect the economic trauma of 2020 to be fixed in just a few quarters, but what the drumbeat of data — both on economic output and employment — shows is that it really is going to be a grind to arrive at a new equilibrium.It’s fantastic news, of course, that the economic expansion remains robust. There was only a single quarter from 2001 to 2019 in which the annualized growth rate exceeded 6 percent; in 2021 there have now been two in a row.The healing is happening. But the new numbers reflect just how severe the scars of last year really were. More

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    Buy My House, But I’m Taking the Toilet

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    In this seller’s market, some sellers are exercising their power with unusual demands and stripping their homes of fixtures and appliances as they leave.In a housing market desperately short on inventory, with prices spiraling toward the heavens, sellers can demand almost anything these days. They can even take the toilets.Toilets, particularly expensive self-cleaning ones with bidets, are among the hot items ending up on moving vans, as sellers flex their muscle to squeeze the most out of a sale. Sellers are taking their appliances, too, and not just high-end Viking stoves. They are claiming midrange refrigerators, stoves and dishwashers to avoid shopping for new ones at a time when such items can be back-ordered for months. Then there are sentimental demands, like fireplace mantels and backyard fruit trees; one Manhattan couple insisted on keeping the sink where their daughter learned to brush her teeth 50 years ago.Buyers, beaten down from relentless bidding wars, shrug and slog along. What else can they do? This is a seller’s world and we’re all just living in it.“Look, sellers have become more greedy,” said Chase Landow, a salesperson for Serhant in Manhattan. “Good inventory is rather tight and they know that they can control the show.”In June, the nationwide median home sale price was up 25 percent year over year to $386,888, while the number of homes for sale was down 28 percent from 2020, according to Redfin. The homes that hit the market last month moved fast — a typical one sold in 14 days — and 56 percent of them sold above the asking priceEven in Manhattan, where the market was slow to recover from the pandemic, properties are moving quickly again, with the number of sales surging 152 percent in the second quarter of 2021, and the median sale price up 13 percent from last year, according to a Douglas Elliman report.With so many buyers knocking, sellers know that if one balks, another one will be waiting in the wings, probably with a better offer. Comedians on TikTok and YouTube paint a comically grim picture of the desperate buyer — throw in the family dog, or pay college tuition for the sellers’ children, and maybe they’ll consider your offer.Mr. Landow recently informed some clients, the buyers of a $15.5 million apartment in the Carlton House on East 61st Street, that the sellers wanted to take the kitchen cabinets. All of them. “The question is what the hell do you do with them?” Mr. Landow said. “I have no idea, which is why it’s all very odd.”The sellers were willing to wait on their custom bamboo cabinetry, which the buyers actually hated, until the buyers renovated the kitchen, agreeing to come back and claim them during demolition. So the buyers relented. “This market is so bananas, you want to do what you can do to keep the sellers happy,” Mr. Landow said. The deal closed in early July, bequeathed cabinets and all.In any market, it is not uncommon for buyers and sellers to spar over light fixtures, window treatments and appliances, with million-dollar deals sometimes unraveling over items that cost a few thousand. Generally, anything affixed to the walls — cabinets, sinks and toilets — is considered part of the sale, with removable items like light fixtures and mounted flat-screen televisions falling into a gray area that gets hammered out during contract negotiations. If an item goes, it is usually replaced with a contractor-grade equivalent. But ultimately, a contract can include whatever terms a buyer and seller agree to.And this year, buyers are agreeing to some doozies.In East Hampton, the sellers of a $2.2 million house decided they wanted to keep a pair of fruit trees, even though removing them left two gaping holes by the swimming pool.Even the sellers’ agent was confused. “Where did that come from? The buyer freaks out, it’s going to ruin the landscaping,” said Yorgos Tsibiridis, an associate broker for Compass, who represented the sellers in the deal. The trees, about six feet tall, were a gift to the sellers’ children from a grandparent and, it turned out, a deal breaker. “She said, ‘Nope, if they don’t allow me to take them with me I’m canceling the contract,’” Mr. Tsibiridis recounted.And so, a landscaper showed up recently and dug up the trees in time for the closing, which is expected to happen in a few days.There are other factors at play beyond power grabs. Housing is in short supply, but so too are appliances, furnishings and building materials, as the global supply chain continues to sputter through the pandemic recovery. As sellers part with their homes, some of them look around and realize that they may not be able to replace the items they’re leaving. So, why not take them?During the negotiations for a two-bedroom co-op in Dyker Heights, Brooklyn, the sellers insisted on keeping the kitchen appliances and the washer and dryer. If the buyers wanted them, they could pay $10,000, a premium for secondhand Samsung appliances. The buyers were livid, as the demand was not mentioned in the listing for the $430,000 apartment.“They felt it was very petty and cheap to throw it in there at the last minute,” said Jack Chiu, an associate broker with Douglas Elliman representing the buyers. He said they would have altered their offer had they known the appliances were excluded. “It hit them from left field.”The buyers considered other apartments, but had gotten this one after winning an eight-way bidding war, following eight months of disappointments. “They were just so tired because they were outbid so many times,” Mr. Chiu said.They agreed to let the sellers take the appliances, and signed the contract. The buyers have started looking at appliances so they don’t move into an apartment with a stripped kitchen, but their first priority is securing a loan and getting approved by the co-op board so they can close in September.Other demands are purely sentimental. On the Upper West Side, a couple who have lived in their co-op apartment for decades looked at the Sherle Wagner sink where their now 52-year-old daughter learned to brush her teeth as a toddler, and couldn’t part with it. The decorative pedestal sink is hand-painted pink and green, and shaped like a seashell. “They know they have the upper hand,” said Sheila Trichter, an associate broker with Warburg Realty, speaking on behalf of her clients. “They know they are being absurd, to a degree. They know that they are asking for a lot.” The couple, moving to Florida, hope to install the sink in their new home.The buyers agreed to the demand, but instead of accepting a contractor-grade replacement, they asked for a credit toward the cost of a new one. “It’s all been friendly-ish,” Ms. Trichter said.And in Monroe, N.Y., Amy Wilhelm, a saleswoman at Corcoran Baer & McIntosh, was stunned when her client told her that she wanted to take the toilet in the main bathroom. “When I picked my jaw off the floor, I said, ‘I guess we could do that,’” Ms. Wilhelm said.The self-cleaning toilet lights up and the lid automatically opens when you walk in the room. But the seller wanted it for a deeply personal reason: Her husband, who had recently died, had wanted the toilet so much that he had jokingly filled a toilet fund jar. “This toilet was their running joke,” Ms. Wilhelm said.The seller disclosed her plans in the listing, turning the fixture into an oddity at the open house. Prospective buyers “were just so amazed by it,” Ms. Wilhelm said.On June 1, just days after the house was listed for $549,000, the seller accepted an offer, well over the asking price. It was one of six.For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate. More