The US housing market has been an unlikely beneficiary from the Covid-19 pandemic. During the pandemic, the median price for an existing home in the US reached over $363,000 in June 2021, a 23.4% increase from 2020. In stark numbers, that means a house selling for $300,000 a year ago would sell for $370,000 today.
Despite that, according to most experts the market is shaping up to look more like a boom rather than a bubble. It only seems like a bubble because prices have gone so high so fast. But instead of a bubble that’s inflated until it bursts, this market is more like a fluffy pillow. It might lose some feathers, but it won’t pop like a bubble.
The main cause of this market is low mortgage rates, followed by low supply. According to the National Association of Realtors, the US has underbuilt by 5.5 million housing units in the last few years. Compare that to the bubble of 2008 when overbuilding created too many housing units, creating an oversupply. Combined with loose lending practices that we don’t see today, the 2008 market was artificially inflated.
Even if we see more pre-foreclosure sales in October and November this year, there will still be a higher demand than available homes to buy.Let me know if you need real estate help now.