The US housing market has been a much-needed relief from the economic devastation caused by the pandemic. However, this does not mean there is no skepticism about where the housing industry is headed, or that the lack of inventory will not continue to pose as a challenge.
Bloomberg.com has started an ongoing article about the movements in the housing market. We wanted to bring you some of the highlights as the story continues.
As working from home and online schooling continues to be the common trend, the demand for bigger homes in the suburbs continues to grow.
Millennials (comprising a large portion of the population) are now at a prime homeownership age and looking to buy across the country. All the while 2020 had a record low level of inventory, and the interest rates plummeted to record lows as well.
As of last week:
The median price of a single-family home in the U.S. was $315,000.
The Freddie Mac 30-year fixed rate for mid-February was 2.73%.
The number of existing homes sold in the U.S. in 2020, the most since 2006 was 842,000.
What we are all waiting to see is if this movement can last. The price increases can affect affordability, the stock market rebound can push up mortgage rates, and the reality is that unless fear of COVID-19 subsides, baby boomers (who will have otherwise sold their big homes in the suburbs post retirement) will not want to sell anytime soon.
Our biggest hope is the vaccine rollout, once fear of the virus is lessened, we will see an increase in inventory, which will likely stabilize prices a little. The pandemic coming to an end will also help the stock market rally which will increase the mortgage rates, which will also stabilize the home prices. However, what we know for sure, is that inventory will still be low for the next few years, as new homes are being developed, so we can expect home prices to stay high because of the basic laws of supply and demand.