UT Study Ties PPP Fraud to 5.8% Higher U.S. Home Prices
Updated
Updated · Fortune · May 29
UT Study Ties PPP Fraud to 5.8% Higher U.S. Home Prices
1 articles · Updated · Fortune · May 29
High-fraud ZIP codes saw home prices run 5.8% above comparable markets during the pandemic, according to a University of Texas study covering 18,761 ZIP codes and more than 90% of the U.S. population.
Fraudulent PPP recipients were 17% more likely to buy homes in 2020 and 2021, suggesting relief money meant for payroll instead became artificial housing demand.
The paper links that spending to a broader consumption burst in high-fraud areas, including a 2.8% rise in auto title registrations and higher grocery and restaurant spending that faded by 2022.
PPP approved about 11.5 million loans worth $793 billion in 2020 and 2021; earlier UT research estimated nearly 2 million recipients and roughly $76 billion of those loans were fraudulent.
The findings add pandemic fraud to the list of forces behind the roughly 40% jump in median U.S. home sale prices between 2020 and 2022, alongside stimulus-driven household cash and other relief programs.
As fraudulent home purchases are prosecuted, what will be the impact on local housing markets and current homeowners?
How has the PPP fraud disaster reshaped the government’s approach to designing future emergency relief programs?
With fraud prosecutions extending to 2031, what new technologies are tracing the billions in stolen pandemic relief funds?
How $76 Billion in PPP Fraud Drove the 2020-2021 U.S. Housing Price Surge—and What It Means for Homebuyers
Overview
Between 2020 and 2021, U.S. home prices surged due to several factors, including increased household savings, government stimulus checks, loan relief programs, and extended unemployment benefits. However, a major and often overlooked driver was widespread fraud in the Paycheck Protection Program (PPP). Billions of dollars stolen through fraudulent PPP loans were funneled into the housing market, where they were used to buy homes and other assets. This artificial demand pushed prices higher, making it harder for ordinary buyers to afford homes and leaving a lasting impact on the housing market.