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= Unemployment caused by Covid-19 and Effects on Residential Real Estate =

Overview
Covid-19 has caused almost every state at home to implement a stay at home order or a strict social distancing law which includes curfews and decreasing maximum capacity in business location. This has caused lots of companies to lose out on revenue that they initially plan on during the second quarter of 2020. Retail stores, restaurants, and shopping plazas were forced to shut down and office parks were forced to seriously reduce capacity or create a way for their employees to efficiently work from home. In the process of initial shutdowns for business and lost revenue business owners were forced to cut costs leading many of them to lay off their workforce. National unemployment rose to 14.70% an all time high in April 2020. Massachusetts unemployment got as high as 17.40% and New Jersey got as high as 16.60% in June 2020. In June 2020 32,436,335 people filed initial claims for unemployment in the United States which was an all time record.

With stay at home orders loosening up in many states such as Massachusetts, New York, and New Jersey people have been able to return to work. However, states such as Texas, Florida, and Arizona have shown what can happen as states lighten up their Covid-19 social distancing restrictions and how it can quickly increase the number of cases in their respective state. On May 05, 2020, when Florida was enforcing strict stay at home orders the total number of new cases recorded was 505. On July 16, 2020, when stay at home orders and social distancing laws were nonexistent Florida reported 13,965 new cases. Texas, Arizona, and other states that are loosening up or completely doing away with Covid-19 restrictions are seeing similar trends. This will likely lead to another state wide shutdown which will lead to further unemployment and loss wages for millions.

Demographics and employees that have been most affected
To understand who has been hit hardest by unemployment due to Covid-19 it is important to first look at the major industries who have been the most affected by stay at home orders and social distancing laws. The travel, retail, restaurant, and meat industry have been some of the hardest hit during the Covid-19 pandemic. Several states and countries have enforced travel bans and mandated quarantine periods if travel to their state or country is deemed necessary causing millions of less Americans to travel and spend their discretionary income in that sector. 43 million Americans traveled for Memorial day weekend in 2019,  AAA Insurance was not able to conduct an efficient survey but suspected that about half that many traveled this year for Memorial Day Weekend. Restaurants and retail stores in several states were forced to close their doors due to their intimate close quarters. When states were allowed to reopen restaurants and retail stores were forced to in a phased approach where their maximum capacity was cut from their original amounts leading to less revenue for their locations. These new laws and rippling economic effects have caused these industries to become the hardest hit when it comes to unemployment. Thousands of airline, hotel, and resort workers lost their jobs due to less travel and lost revenue through the pandemic. Retail workers account for 42 million jobs in the United States and restaurant employees account for 13.5 million jobs in America. This led to nearly 66 million Americans being seriously affected from those industries alone.

When looking at age demographics the young population has been hit hardest due to their perceived expandability in the workplace. Older adults in the workplace are more likely to hold management positions and their experience is viewed as a reason to hold onto them instead of keeping on a less experienced less senior young employee. 19.3 million Americans make up the young workforce demographic aged 16-24. This includes recent college grads, high school employees and about 9.3 million workers in the service industry. Amanda Borroso from the Pew Research Center claims that these employees have been the first to lose their jobs due to budget cuts and will end up being the last to be hired when the economy begins to come back to normal because of their lack of experience.

Classes of real estate affected by unemployment
Residential real estate is split up into three different classes depending on its geographical and physical characteristics. Properties in in above average locations with above average physical characteristics are typically ranked class A, properties in average locations with average physical characteristics are ranked class B, and properties in below average locations with below average physical characteristics are ranked as class C. People you typically live in class A residential real estate are in the upper class, people who live in class B real estate are in the middle class, and people who live in class C real estate are in the lower class. This knowledge is important when looking at which segments of residential real estate will be most affected with delinquent rent payments or defaults on mortgages.

Class A
Upper class and upper middle class jobs have been less affected in terms of unemployment. Several companies have been able to adjust to work from home and have invested intensive capital due to the uncertainty of how long Covid-19 will be affecting American lives. Professions that fall in this category include, accountants, physicians, engineers, professors, and lawyers. Typically jobs that require higher levels of education and are more difficult to find talent for. This has resulted in real estate prices for Class A properties to stay the same. However, there was a rise in vacation rentals in April as professionals who lived in cities such as New York, Los Angeles, and Boston wanted to leave the city and spend the summer in a vacation home away from the higher risk areas.

Class B
Class B properties are typically filled by the middle class who have professions such as electricians, mechanics, dental assistants, primary school teachers, and management in retail or restaurant locations. Across the country many of these professions were temporarily put on hold but most have resumed work as normal as the United States has been able to more safely run the economy. Mortgage and rent payments were temporarily missed but many states put up rent protection programs such as Massachusetts allowing residents more time to pay their rent without being evicted from their homes.

Class C
The hardest hit market has been the Class C property market and it will continue to be the hardest hit moving forward. Class C properties are typically filled by lower class employees. Millions of employees in this category have been laid off and are uncertain as to when they are going to be able to go back to work or if they will need to switch jobs entirely. On average people live paycheck to paycheck as well and do not have sufficient savings to or emergency fund for times like this. Landlords who own such properties are losing out on rent and defaulting on mortgages and losing value in their property. In states that Covid-19 is experiencing a second wave local homeowners may lose out on more rent payments and the value of their investments will likely continue to decrease as states shelter renters who have lost jobs and are unable to make rent payments.