Published on: October 26, 2020


If home sales alone were an indicator of economic health, you might conclude that the economy has rebounded smartly from the pandemic-induced recession and is on a path for steady growth. But the housing market has emerged as more an outlier than an indicator, seemingly breaking free of the downward pull the pandemic continues to exert on other critical gauges of economic health.

New and existing home sales both posted 14-year highs in August, as low interest rates unleashed pent-up demand, pushing would-be buyers into heated competition for sparse listings.

Existing home sales sold at an annualized rate of 6 million units in August, according to the National Association of Realtors (NAR), nearly 12 percent above the year-ago level. September sales blew past that total, increasing by nearly 10 percent over August and by 20 percent year-over year. Pending home sales, a marker for future activity, increased for the fourth consecutive month in August, rising to 132.8 on an NAR index, up from 122.1 in July and almost 25 percent higher year-over year.

Posting their sixth consecutive monthly gain in August, new home sales sprinted well past what had been fairly upbeat projections, increasing to an annual rate of more than 1 million units – nearly 5 percent above the July rate and 43.2 percent (that is not a typo) higher year-over-year.


Can housing continue to thrive if the economic recovery falters? Some industry executives are raising question and nervous about the answer. Employment growth is a growing concern. Employers added 661,000 jobs in September, down from the 1.5 million jobs gained in August and below the 800,000 analysts had projected.

“This report is an illusion of progress at a time when we needed accelerating gains in the labor market,” Nick Bunker, economic research director at Indeed, a job placement site, told CNBC. The economy has now regained roughly half of the 20 million jobs it shed after the pandemic struck in March. But “that is not nearly enough,” Bunker said. “This report is massively concerning,” he added. “We are not where we need to be, nor are we moving fast enough in the right direction as we head into fall.”

Among the indicators that are unsettling Bunker and other analysts:

  • Although employers continue to add job, weekly claims for unemployment remain stuck above pre-pandemic highs. Averaging between 800.00 and 900,000 for the past four weeks, claims are tracking higher than in any previous recession since 1967.
  • Many unemployed workers who had been saying their job losses were temporary are now saying they think the losses are permanent. More than half the economists responding to a recent Wall Street Journal survey agreed that between 10 percent and 20 percent to of the jobs lost during the pandemic won’t return.
  • Several large companies, Disney and Allstate among them, have recently announced significant layoffs, airlines are beginning to furlough workers, and small businesses are warning that they may close if Congress doesn’t approve another round of financial assistance for businesses and consumers.

Highlighting that concern in recent testimony to Congress, Federal Reserve Chairman Jerome Powell said the Fed “has basically done all the things we could think of” to support the economy, including holding interest rates near zero and buying bonds to pump cash into the financial system. “The path forward,” he said, “will depend on keeping the virus under control and on policy actions taken at all levels of government.”


Low mortgage rates and pent-up demand have fueled a surge in home sales despite the pandemic, but a pandemic-driven desire for more space has created a preference for single-family homes over condominiums. Condominium prices increased by 5.4 percent year-over-year in August, less than half the increase (11.9 percent) for single-family homes, creating the largest price-gain gap between the two sectors in more than six years, Redfin reported. The dearth of single-family listings is putting upward pressure on prices in that category while ample condo listings are having the opposite effect there. Although the year-over-year increase in condo sales (11.8 percent) outpaced the single-family gain (10.8 percent), the shortage of single-family listings spelled the difference, “putting a lid on how far single-family home sales can grow,” Taylor Marr, Redfin’s lead economist, explained. New listings of single-family homes increased by just 1.8 percent year-over-year in August, compared with an increase of 18.4 percent for condos. The supply of condos available for sale increased by 3.6 percent while the inventory of single-family homes shrank by 26 percent. The dearth of single-family listings is producing rapid sales and igniting business wars in this category; condos, on the other hand are selling more slowly and attracting less interest from buyers, who are seeking more space to accommodate work and schooling-from-home requirements. Steady price increases in the single-family category may turn this situation around, however, Redfin’s Marr notes in a recent report. “If prices of single-family homes continue to surge to unsustainable levels, condos may make a comeback,” he suggests, “as they could become the only type of home that buyer sin some areas can afford, while also avoiding intense bidding wars.”


Insurers and businesses are locked in multiple court battles over whether business interruption coverage should apply to pandemic-related losses, and insurers seem to be winning most of them. Insurance Journal reports that of the 23 U.S. cases heard thus far, courts have dismissed 17, agreeing with the insurers that actual physical property damage is required to trigger the coverage. The courts rejected six motions to dismiss, but three of those rulings came from the same judge, according to this news report, based on a data base compiled by the law firm, Zelle.

“No one expected every court to grant all of these early motions to dismiss,” Steven Badger, a partner in Zelle’s Dallas office, told the trade paper. But the trend, he said, is clear. Most judges are finding “no credible argument for coverage.”

A decision by U.S. District Court Judge Robert Gettleman in Chicago reflects the consensus reasoning: The coronavirus, he said, “Damages lungs. It…does not damage printing presses.” U.S. District Judge Cathy Ann Bencivengo in San Diego echoed that view in an 11-page decision dismissing a suit filed by a chain of barber shops. “The policy insures property….and physical places of business, she wrote, “not plaintiff’s business itself.”

The judge responsible for three of the six decisions favoring the plaintiffs agreed with them that the virus causes the property damage required for coverage. The plaintiffs, he ruled had established a credible argument that the virus is a “physical substance” that attaches to and damages properties, making them unsafe and unusable.

Although these early victories have encouraged insurers, they still face a tsunami of pending claims, according to the Insurance Journal article, which notes: A University of Pennsylvania data base has identified more than 1,009 lawsuits seeking business interruption coverage for pandemic losses.


The number of fair housing claims skyrocketed between 2016 and 2018 and the Trump Administration’s failure to enforce fair housing laws is to blame, a report by Senate Democrats contends. The administrations policies have “systematically undermined the progress that has been made over the past 50 years, the report issued by the Senate Banking, Housing and Urban Affairs Committee, contends. The report cites several direct assaults on fair housing goals, among them, the Administration’s announced plan to repeal the 2015 Affirmatively Furthering Fair Housing rule. The clear intent, the report says, was to “exclude people of color” from suburban communities. The evidence of continued and increasing inequality in housing “is not an accident. This is by design,” Sherrod Brown (D-OPH), chairman of the Senate banking Committee, said in a statement. “This report takes a hard look at our nation’s history of housing discrimination, describes how the Trump Administration’s actions undermine that fight, and lays out the work that Congress and regulators must do to reverse the harm done by this Administration and move forward in our continued fight for racial justice and equality,” he added.

In a related development, Maxine Waters (D-CA), chair of the House Financial Services Committee, is urging the Department of Housing and Urban Development (HUD) to reconsider its revision of the “disparate impact” standard used to evaluate fair housing discrimination claims. HUD says the new rule is designed to create a “uniform standard” for reviewing discrimination claims. But the effect, Waters says, will be to make it more difficult for plaintiffs to prove that policies have a discriminatory effect even if there is no discriminatory intent. “Disparate impact claims have been critical to holding industry and private actors accountable for the discriminatory impacts of their policies and practices,” Waters said in a press statement. “The new rule shifts the burden of proof from the perpetrators of discrimination onto the victim, making it significantly more difficult for victims of housing discrimination to prevail in court and ultimately making it easier for discriminatory policies and practices to plague our housing markets,” she added.



The pandemic-induced demand for more space has triggered a migration from downtown areas to the suburbs. Falling apartment vacancies and rising rents in suburban communities reflect that trend.

A change in the bankruptcy law has made reorganization under Chapter 11 easier and less expansive.

Congress has approved yet another one-year extension of the National Flood Insurance Program, but legislation reforming the program remains stalled in Congress, despite bipartisan agreement that reform is needed.

The near-term economic outlook is clouded by the pandemic; the longer-term forecast is even less encouraging.

It seems you can go home again, and the pandemic has forced more than 52 million young adults to do just that. A Pew survey found 26.6 million people between the ages of 18 and 29 living with one or both of their parents in July, up from 47 percent in February.



Insurance companies providing coverage for condominium associations typically “waive subrogation,” agreeing not to sue the association or unit owners responsible for damage claims for which the policy pays. But the subrogation waiver applies only to the unit owner; it does not apply to a tenant who rents the owner’s unit, the Virginia Supreme Court ruled in this dispute between a tenant and an insurance company (Erie Insurance Exchange v. Alba).

The tenant (Alba) rented a unit in the Chimney Hill Condominium Association in Virginia Beach. A fire resulting from the careless disposal of smoking materials by Alba and her guest, caused extensive damage to the unit and common aeras of the condominium. As required by her lease, Alba paid for repairing the unit; Erie paid more than $822,000 for the common area repairs and sued Alba to recover those costs. Alba contended that the subrogation waiver the Declaration required for the master policy covered Alba as well as the unit owner. A lower court agreed, ruling that the “intent” of the governing documents and their “common sense application” was to extend to the tenant “the same benefits conferred…upon the unit owner, including the subrogation waiver.”

Erie appealed, arguing that because Alba was neither a unit owner nor named as an “additional insured” in the policy, subrogation did not apply. The Virginia Supreme Court agreed.

The interpretation of an insurance contract, the court said, should be based on the intent of the parties. Because the language in the policy at issue was not ambiguous, the court explained, provisions of the association’s declaration and bylaws that Alba cited to support her argument for waiver were not relevant.

“The Association’s governing documents may have instructed the Association on the insurance it was expected to obtain” the court noted, “but the actual terms of the agreed upon coverage—including the rights and obligations of the parties involved—can only be found in the binding agreement between the Association and Erie as contracting parties.”

The policy identified the association and unit owners as named and additional insureds, against whom Erie waived its subrogation rights. Because the waiver language in the policy did not refer to tenants “or other non-owner occupants,” the court said, “the clear inference is that Erie did not intend to waive subrogation as to anyone other than the Association and the individual unit owners. Alba, as neither an individual unit owner nor part of the Association, is not an insured party from whom Erie would be prevented from pursuing recovery, and is therefore not protected by any waiver Erie may have made as to subrogation.”

Alba argued that while she may not have been named specifically in the policy, because she was a resident of the community, her coverage by the association’s insurance should be implied. The court rejected that analysis, noting: “There is no contractual agreement between Alba and the Association, let alone one that would serve as a shared expression of the mutual intent to vary Alba’s common law obligations with respect to potential acts of negligence. Absent this shared agreement, we see no reason to imply a departure from the norm when the parties had the ability to reduce their understanding to writing if they so intended.”

Considering the language in the declaration and bylaws, which Alba argued the court should do, would not change that conclusion, the court said, because the declaration “clearly limited the intended scope of the master insurance policy to the “Association, the Unit Owners and their respective mortgagees.” The bylaws provided even less support for Alba’s position, the court said. They made owners ultimately responsible for the negligence of their tenants, “contemplating the possibility that damages arising from a lessee’s negligence would not be covered by insurance proceeds.” But the bylaws also “expressly recognized…that this delegation of responsibility had no effect on the insurer’s waiver of subrogation, implying that the Association was cognizant of circumstances where the insurer might pursue a claim against a unit owner’s lessee where warranted. Thus, even if construed as binding agreements between the Association and Alba,” the court reasoned, “the governing documents reflect the Association’s expectation of maintaining a lessee’s accountability.”

The insurer waived subrogation against owners because of their relationship with the association, the court noted. But the association “has no such relationship or agreement with Alba that absolves her of responsibility for her negligence. Even if the Association’s governing documents were construed to be binding agreements between the Association and Alba,” the court added, “the Association simply could not unilaterally imply coverage under its insurance policy or protection from subrogation in light of the unambiguous provisions in the insurance contract that show Erie’s opposite intent. It is also unlikely that the governing documents could be read as intending to do so.”

Focusing on the lease agreement itself ─ even if there were cause to do so ─ wouldn’t help Alba’s position the court observed, because it contains “no language the disclaims Alba’s liability” for damage to the unit or the association’s property. Nor is there any language that serves to alter her common law responsibility for potentially negligent actions, the court added, noting that the lease terms “expressly reinforce that liability.”

All of the documents involved – the insurance policy, the condominium governing documents and the least make it “abundantly clear,” the court said, that the association had no intention either of absolving the tenant of responsibility for negligent acts that resulted in a loss to the association or of “subverting Erie’s ability to recover from a tenant whose purported negligence necessitated the insurer’s payments for that loss.”


“We missed the spring buying season because of the pandemic, but the second half of the year looks quite dazzling.” Lawrence Yun, chief economist, National Association of Realtors.

Marcus, Errico, Emmer & Brooks specializes in condo law, representing clients in Massachusetts, Rhode Island, and New Hampshire.