COVID relief fraud fueled spike in US house prices, report says

foxbusiness.com:

Serhant Associate Broker Nile Lundgren weighs in on the middle-class getting priced out of homeownership.

In the years following the short but deep pandemic-induced recession, the U.S. housing market experienced a frenzied surge in prices driven by limited inventory, pent-up demand and a growing demand among consumers for more space.

But one other factor may be to blame: billions of dollars in stolen pandemic relief money from the Paycheck Protection Program, according to a new study conducted by researchers at the University of Texas. 

The Paycheck Protection Program, or PPP, provided forgivable loans of up to $10 million to businesses if they retained their workers and maintained payroll during the pandemic. 

Between April 2020 and May 2021, it distributed about $780.4 billion to more than 10 million businesses, according to government data. 

HOMES SELLING NEAR RECORD HIGH AGAIN AS SUPPLY SHORTAGE WORSENS

Homes in Rocklin, Calif., Dec. 6, 2022.  (David Paul Morris/Bloomberg via Getty Images / Getty Images)

The program was also rife with fraud. Estimates vary, but the inspector general of the Small Business Administration has projected the government lost at least $20 billion in potential fraud through the PPP.

Previous research from the University of Texas estimated an even higher figure of $116 billion. 

«The magnitude of this fraud can have spillover and distortions on other parts of the economy,» Sam Kruger, a finance professor at the University of Texas who co-wrote the study, told FOX Business. «You have potentially hundreds of billions of dollars of fraudulent pandemic relief flowing into pretty concentrated geographic areas.» 

Home prices skyrocketed after the early months of the pandemic. 

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