They owned a two-unit townhouse in the Bedford-Stuyvesant neighborhood of Brooklyn, and they felt lucky to have it, with its yard and the kind of close-knit neighbors who compete to shovel one another’s sidewalks after a snowfall.
When the city shut down, their daughter, Edie, was 7 months old; Drew and Amena co-parented while working full time, one at the kitchen island, the other at the breakfast table.
Amena crunched the numbers and quickly realized a truth about America: Thanks to persistently low interest rates and tax policies that favor the rich, you can almost always get more space with a mortgage than with the same amount in rent.
They were looking for a house that was move-in ready, maybe around 1,500 square feet overall, with three to four bedrooms, two baths and a shed or office space for Amena in the backyard — she planned to keep her New York job in education policy and telecommute.
She reached out to John Gilchrist, a close friend from college who was now a real estate agent and, in January, he began taking her on up to four FaceTime tours a day.
The day that she and Drew were scheduled to fly to Austin for house-hunting, at the beginning of February, New York was buried in snow and flights were being canceled, so they opted to reschedule theirs.
At the urging of Gilchrist, who told her how tight the market was, she bid more aggressively, offering $495,000, and was chagrined when she lost that house too.
For Amena and Drew, their Austin home-buying odyssey was just beginning — a monthslong ordeal that would teach them quite a bit about the cruel realities of America’s housing market, in which home prices nationwide have risen by an astonishing 24.8 percent since March 2020.
By bidding on two properties she had never visited, in a city nearly 2,000 miles away, Amena joined the 63 percent of North American home buyers in 2020 who made at least one offer on a home that they had never stepped into.
Combine that with the surge of millennials into the housing market — they represented more than half of all mortgage originations last year — as well as the insatiable appetite of investors, who now snatch up nearly one in six homes sold in America, and the contours of a new, lightning-fast, permanently desperate housing market come clearly into view.
“It’s so irresponsible,” Amena lamented, when discussing those first, remote bids they made, and Drew chimed in: “In a normal market you would never do that.” By “normal,” Drew meant a time when a home buyer could tour a house in person, mull it over, go back a second time with her parents or friends and then make an offer with time for an inspection and an appraisal.
The house was “well cared for,” a buyer’s agent told me, but “nothing out of the ordinary”: two stories in brick, with a large arched window — the sort of place one of Tony’s underlings might own in a Texas spinoff of “The Sopranos.” It was listed on Dec.
Over the last decade, an average of more than 100 people have moved into the area every day.
“Before the pandemic, you would see a line of 20 people standing outside a restaurant downtown,” Albert Saenz, who has been a real estate agent since 2003, told me at the time.
The current boom is better compared to a river, one fed by streams that have long been visible on the horizon: high demand, low supply and a dysfunctional economy in which wages are stagnant while restrictive zoning and poor public policy have turned housing into an artificially scarce commodity.
Sellers, afraid of inviting the virus into their homes or reluctant to move in uncertain times, didn’t list, and inventory declined by nearly a third from February 2020 to February 2021, falling to the lowest level relative to demand since the National Association of Realtors began record-keeping almost 40 years ago.
As the pandemic made the poor poorer, meanwhile, it made the rich richer.
Large corporate and Wall Street landlords, like Invitation Homes, American Homes 4 Rent, BlackRock and Blackstone, are arguably the most toxic players, driving up rents in the select markets they saturate, lobbying for corporate tax cuts and fighting tenant protections.
The end result is that millennials buying their first home today are likely to spend far more, in real terms, than boomers who bought their first home in the ’80s.
Given these handicaps, they have to approach things differently, and that’s changing real estate, too.
Except while Douglass was teaching fourth grade and bleeding away half her earnings on rent, this woman, just a few years older, had bought her house, and was building equity.
Shortly afterward, Douglass, who was 24 and had $35,000 worth of student loan debt, bid on nine houses in East Austin before winning one so far east it was almost outside the city: $180,000 with 5 percent down.
With real estate, “I’d figured out how to take control of my life, and it was insanely exciting.
Six of them now own homes within a mile and a half of her in East Austin; four of those friends, all under age 35, own at least two properties.
They talked for seven hours and over the next few months decided to found an agency focused on the clientele they were already serving, clients most Austin agents don’t want to touch: first-time buyers looking at homes under $200,000 or $300,000.
On a recent Wednesday evening, Douglass and Modares logged on to a video chat to answer questions from their third Homeschool class, a group of 30 students from across the country, almost entirely millennials and younger.
I’ve been looking to buy for a long time, looking to stay in my area and just find a house and a yard.
Most of the students found Open House through word of mouth or social media, and they signed up for the class because they were intimidated by the market.
Joking aside, the skit encapsulates a truth: Much of Open House’s messaging nudges buyers to think beyond the traditional path of homeownership, built on long-term investment in one home.
House hacking, cash flow, passive income, financial independence: These are the buzzwords, but they aren’t new concepts.
Gilchrist had scheduled more than 20 showings, and so on that first weekend, as the state froze, they saw as much as they could, including trendy new houses and the Emmitt Run home being remodeled by its owner and his friends.
The kitchen was being renovated, and they were washing dishes in the tub, but it had a hot plate and heat.
Driving up to the address, Malvina Reynolds’s “Little Boxes” played in Amena’s head: “Little boxes on the hillside,/Little boxes made of ticky tacky,/Little boxes on the hillside,/Little boxes all the same.” “It was just like, Oh, my God, they’re all the same! But it was fully done, had the backyard, had all of the space and the rooms that we wanted, had a loft upstairs for me to have an office plus a guest bedroom and a room for the baby and the master,” Amena told me.
As night fell, Amena submitted three offers on her phone: on the powder blue little box; on a 2005 home that felt too far south but was across from a good Montessori school; and on an East Austin condo from 2006 with concrete floors that reminded Drew of the Greenpoint loft apartment they once rented in a former pencil factory.
On their simultaneous bids, Amena and Drew never went more than 8 percent over asking price, and they returned to New York having lost out on all three.
And the market was moving so fast that this had become a real risk: Prices from a month before — generally the most recent data available to appraisers — were already outdated, leaving buyers scrambling to make up gaps of as much as $100,000.
“It was a mess of a place — we would have to do everything over — but it was huge and beautiful in terms of its potential,” Amena told me.
Westmoor acknowledged how brutal the market is with an apology, and Duval said they got 28 offers.” Westmoor got 27.
“This is market is no fun,” the Westmoor listing agent told me.
“My client had a big heart and was sentimentally attached, but the less risky bids for her were cash and no contingencies,” the listing agent continued.
Often, the person still standing was that most hated figure in the Austin real-estate market, the California investor.
For $1 million down, he’d own $5 million in assets that he would rent out for top dollar and that he believed would double in value in five years and double again by 12 years.
He marveled at how FaceTime, DocuSign and electronic transfers made everything seamless, but because real estate money can now move so easily, it meant what he had liked about real estate investing in the first place — its stability and relative slowness — no longer held true.
On a steamy 95-degree day in late June, Matt Holm lifted the winged door of his Tesla Model X so that I could hop in the back seat behind his client, Jon, a man who worked in commercial real estate financing in Santa Monica.
He was looking for a home where he could declare residency to take advantage of Texas’ lack of income tax — but he also wanted to live elsewhere half the year, and so he was looking for a place he could easily rent out and make money on.
“There’s nine million square feet of office being built,” Holm said, as we drove through downtown, cranes and glass skyscrapers glinting above stalky yellow-limestone and red-granite buildings.
“People haven’t even factored in the Elon effect,” he continued, “I can’t tell you the number of people that are saying, Oh, Elon’s building a factory.
Although Austin and the state stipulated that owners could rent only their homestead and only for a maximum of six months a year, “that could be every weekend,” Holm said.
“The investor I know that’s killing it right now is a systems guy,” he continued.
“Because he’s bought them all in the ETJ” — the Extraterritorial Jurisdiction, a broad swath of unincorporated land bordering Austin that isn’t subject to the city’s short-term rental restrictions.
“I don’t need so much house unless I was really going to take on the project you describe,” he said.
Next up was a condo with clean white walls, black fixtures and gray oak floors.
Despite the competitive market, despite having to work double the hours and write triple the offers, Open House’s agents were moving cash-strapped millennials and some Gen Z’ers into houses in record numbers: 130 so far this year, 88 percent of them first-time home buyers, at an average price far below the Austin metro median of $450,000.
It began with a couple of fun dive bars and an excellent Japanese fried chicken truck and exploded into the site of award-winning restaurants, a hipster honky-tonk, a Whole Foods and, now, some of the highest-price-per-square-foot real estate in Austin.
The Latino family that sold the two lots was using the profits to purchase a larger parcel of land outside the city, a move common among people of color selling their homes on the east side.
In the late spring, Mau flew in from Southern California, where he works as a mortgage broker, to help with the renovation.
So she went over to the run-down yellow house, which seemed to be made of little more than splinters and asbestos.
So the two started knocking on doors there, rapping, rapping, rapping as instructed by Saldaña’s son, who told them to continue to knock so that she could follow the sound.
Smith poured milk and cereal into a bowl, and Saldaña dug in as if she hadn’t eaten all day.
Micah, who had been so excited to purchase his first property, told me that by the end, “I had no more emotions.” Given his budget — $300,000 was his upper limit — he worried he’d have to wait a long time before stumbling upon another off-market house.
Real estate agents have a saying: “There’s a buyer for every house, but there might not be a house for every buyer.” That’s the definition of a seller’s market — and a pithy indictment of the way America subsidizes homeownership, in an era when a majority of Americans are utterly shut out of it.
“The only remotely comparable points in time in the modern era of low inflation were late 2005, when price appreciation peaked in the 14 percent range for many months, and 2013,” when prices finally began to rebound after the Great Recession.
Amena began flirting with the idea of renting, but friends of hers were having as much difficulty finding a rental in Austin as she was with buying.
But it had a guest room for Amena’s parents, and the master bedroom was at the back of the house looking onto a huge backyard with a mature fig tree.
The neighborhood was so close to so many major highways that it was no more than 20 minutes away from almost all of the major tech campuses.
While talking to their lender, they also learned that the city wouldn’t let them add anything to the backyard — a heartbreaker.
She FaceTimed Drew: The living and dining area was cramped, but the owners, who were moving with their two children 30 minutes south of Austin to Niederwald, where they could afford more square footage and more outdoor space, had large furniture.
And it would be for quite some time, because houses weren’t the only thing in short supply during the pandemic: The same was true of appliances, cabinets, vanities, sinks and shower heads.
The problem, they felt, was that the city seemed too staid, too homogeneous, too white — and each sale in this crazy real estate market seemed to be making it even more that way.
She has written about housing, inequality and con men for The New Yorker, The Atlantic and The New York Review of Books, in addition to the magazine.