The great divergence: U.S. COVID-19 economy has delivered luxury houses for some, evictions for others
By Michelle Conlin
(Reuters) - When the temperature dropped to freezing in Columbus, Ohio in mid-October, the kids were out of heat. The gas had been turned off in her apartment for failure to pay. DaMir Coleman (8) and his brother KyMir (4) warmed up in front of the electric oven.
The power supply should also be interrupted. Soon there might be no stove, no light and no internet for online training. The boys' mother, Shanell McGee, had already turned off her cell phone and feared she could soon be evicted from her $ 840-a-month apartment. The rundown unit consumes nearly half of its wages from working as a medical assistant in a clinic where she works full-time but receives no health benefits.
Just 14 miles northwest of McGee's neighborhood, Kiki Kullman is having one of the best years of her life.
The real estate business she runs with her family has just sold the most expensive home in its history: a 13,000-square-foot property that is listed for $ 4.5 million and has an elevator and a classic car showroom. And in late October, Kullman closed his own house - a three-story, $ 645,000 colonial building painted stately white with a columned front door - a fun place for her two-year-old twin boys to grow up.
Columbus is an example of the economic divide that the coronavirus crisis is creating in America.
Professionals like Kullman are thriving, thanks in part to the Federal Reserve's pandemic-induced policies that have fueled the stock market and fueled industries like real estate with record-low interest rates.
For many low-wage workers, the crisis has meanwhile brought a cruel surge and overturned families like the McGees who were already living on the edge. Nationwide, millions of people, including hotel clerks, retail clerks, waiters, bartenders, airline employees and other service workers, have lost jobs as COVID-19 fears curbing consumer demand.
Economists call this phenomenon a "K-shaped" recovery, where those who are up continue to climb up while those who are down see their prospects deteriorate.
Ned Hill, Professor of Economic Development at Ohio State University, called this slope of the K "fat and wide and long and ugly looking". He said there was little hope of a return to normal as long as the coronavirus continues unabated in the United States. COVID-19 cases are on the rise in Ohio, hitting a record of 3,590 new cases on October 29. At least 643 people have died in Columbus alone.
"People's jobs and incomes are gone and they won't return until the risk of dying from the virus subsides," Hill said. "That's it."
Columbus is located in central Ohio, about halfway between Pittsburgh and Indianapolis. It is a city with around 900,000 inhabitants. Ohio State University and the state capital have roots in sectors such as hospitality, education and health, government, and professional and business services.
This mix has allowed it to outperform some other cities in the rust belt that are more dependent on production during the crisis. Columbus's September unemployment rate was 7.5%, below the national average of 7.9%. But, as in the rest of the United States, the front line and modestly skilled workforce has been hit the hardest.
The divergence of happiness can be seen in the city's housing market.
For those with funds like real estate agent Kullman's clients, low interest rates have resulted in cheaper mortgages so they can afford bigger homes. Along with Cincinnati, Kansas City and Indianapolis, Columbus is just one of four US cities where houses are sold in less than five days on average, according to real estate research firm Zillow.
"It's crazy to see the $ 1 million prize in Columbus receiving multiple offers and cash offers," said Kullman, 36.
Housing construction is a precarious business for tenants affected by the downturn.
In the early days of the pandemic, when Ohio residents sought refuge, evictions in Columbus fell thanks to local and state guards to keep renters inside their homes. According to Princeton University's Eviction Lab, which is tracking evictions, 1,774 eviction cases have been filed since September, well above summer levels. The Greater Columbus Convention Center now serves as a busy eviction court.
These filings came in spite of a decree by the U.S. Centers for Disease Control and Prevention (CDC) dated September 4th that banned all evictions nationwide until January 1st to prevent a flood of homeless people infected and spread by the coronavirus. After the moratorium, landlords will not be able to evacuate tenants who can no longer pay rent because their income has been affected by COVID-19.
However, landlords are not obliged to notify tenants of this protection and can file eviction suits. Only tenants who know about the CDC ban, qualify for it, and take legal action to assert their rights can stop their evictions. Among the 24 cities the Eviction Lab is tracking, Columbus is one of the few where the post-ban evictions did not fall.
The rainfall can be seen over Columbus. The local fund of federal aid to help tenants with lack of money to pay rent was exhausted in September. Food banks are running out of staples and homeless shelters are at full capacity, according to community supporters.
Utility shutdowns have soared that lawyers for the Legal Aid Society of Columbus have resorted to bankruptcy filings for renters to keep their heat, lights, and water on.
If current conditions persist and without a new round of federal aid, up to 40 million people could be at risk of eviction in the coming months, according to the Aspen Institute, a think tank. In a typical year, 3.6 million eviction cases are filed.
"Bad costs cost you"
Before the pandemic, 29-year-old McGee had financial problems. In 2014 she bought a 2008 Chevy Malibu off a corner lot at 22% interest. She said the Junker stopped running a long time ago, so she stopped paying in 2016. McGee said she offered to return the vehicle with 176,475 miles, but the lender would not take it back.
In March, McGee's home friend lost his job at a fast food restaurant when Ohio was on lockdown and his household's income dropped. He was diagnosed with COVID-19 in August and the whole family had to be quarantined. That same week, McGee received a call from her employer stating that her lender had received a court order to collect 25% of her wages in order to repay more than $ 10,000 with fines and late fees that she always received still owed for the car.
That made her pay $ 728 to take away every two weeks. She couldn't afford school supplies for her sons and had to borrow gasoline money from her mother to work in her boyfriend's car.
"It was heartbreaking, it was all at once," said McGee, who wears square glasses and has a big, easy smile.
She sought help from Paul Bryson, a Legal Aid Society attorney who filed for bankruptcy in October to get McGee's utilities back on and freeze the garnishment. The court approved the petition, but not until McGee's lender received $ 1,023 of her wages.
"Being poor costs you a lot of money," said Bryson. "Even before the pandemic, a person's whole life is falling apart if they get an attachment. Now what? If nothing is done, we'll just have a lot of people on the street."
McGee's mortgage lender, Columbus Mortgage, did not respond to requests for comment.
Live the dream
Kullman, the real estate agent, dreamed of living on Bedford Road, a sought-after address in the Columbus suburbs, for years.
In the area's poshest neighborhoods, gorgeous homes that offer perfect pandemic connections, with amenities like his and hers home offices and spacious basements for online training, can be sold in one day, often with multiple bar offers that price far above the requirements. Kullman said some buyers place bids without ever viewing a home. The most desperate are willing to go ahead and conduct inspections without remedial action, which means they won't seek concessions if the inspection reveals a fatal error. Others, she said, have approved "insane escalation clauses with no cap". In real estate language, this means they outperform any other offer, no matter what the price.
"You have to sign your life to get the house you want," said Kullman.
In August, Kullman, who runs the Kullman Group at Street Sotheby's International with her husband, father and sister, found out that a married couple who lived on Bedford Road were about to move. She made a bid before the house came on the market and the owners accepted. The Colonial is right next to her sister's house. Your children share backyards.
Kullman is aware of her fortune amid the pandemic and the evil hand that the coronavirus has inflicted on the city's most vulnerable people.
Her husband did business with a landlord selling a portfolio of homes in Columbus' low-income Linden neighborhood. Non-paying tenants in these properties have received eviction notices.
"It's what we see here day and night," said Kullman. “What you wouldn't expect with COVID. It's sad, but it's true. "
(Reporting by Michelle Conlin in New York; Editing by Tom Lasseter and Marla Dickerson)
Click to receive the most important news as a notification!
Messi imitated Maradona's goals and skills but not his lifestyle
Up to 87 million workers could lose access to paid leave next month if Congress doesn't pass another coronavirus relief package
China Oil Giant CNOOC Targeted by U.S. After Years of South China Sea Tension
Now in recession, India is faring worse than most major economies
A Successful U.S. Missile Intercept Ends the Era of Nuclear Stability
'That is a talented, talented brother': Barack Obama endorses Drake to play him in a biopic