The Pandemic Ignited a Housing Boom--but It's Different From the Last One

[Demovictory9]

The Pandemic Ignited a Housing Boom—but It’s Different From the Last One
Residential home sales are hitting peaks last seen in 2006, just before the bubble burst, but this time mortgages are stricter, down payments are higher, and a tight supply is supporting prices



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The current housing boom is far more stable than the last one and poses fewer systemic risks, economists say. A downside: There are more barriers to entry, and it’s more difficult for buyers who aren’t already homeowners to make that first purchase.


Most real-estate analysts agree that the pandemic helped ignite the current boom as some urbanites looked to leave crowded cities like New York and San Francisco for cheaper cities or for more space in the suburbs while working from home. When lockdowns began lifting last year, home sales took off: June sales surged nearly 21% over the prior month, the biggest monthly increase on record going back to 1968. That milestone lasted only a month, when July sales rose almost 25% from June.

“Covid has catalyzed a rethinking of where we live, and why we live there, and where we work, and how we work,” said Rich Barton, chief executive of online real-estate company Zillow Group Inc.

Market watchers also say that a number of longer-term trends are at play that should keep the housing market hot, or at least steady, even after Covid-19-related demand fades.

https://www.wsj.com/articles/the-pandemic-ignited-a-housing-boombut-its-different-from-the-last-one-11615824558?mod=e2tw

[Mr.Bill]

1. From what I can see in my small part of the world

is there is not nearly as much building going on as during the last boom.

[Demovictory9]

2. true. in 2006, they were putting down condos on every bit of land (southern california)

[BigmanPigman]

3. San Diego has had big increases in housing prices

during Covid. A local realtor was on the news a couple of months ago and he said the current increases aren't sustainable and should level off fairly soon.

[leftieNanner]

4. Decent Houses in my city that are well priced are going FAST!

It's a good thing that the lenders aren't setting up those garbage mortgages that blew things up last time.

We have considered downsizing - but then I would have to clean out my garage.........

[Demovictory9]

5. my neighborhood, homes are under contract within a week!

[leftieNanner]

6. Same Here

Even the more expensive ones that used to take longer to sell. A RE Agent friend of mine told me that there was a kind of price ceiling over which it was tough to find a buyer. That doesn't seem to be the case now.

[Blaukraut]

7. We're outside of Boston and it's crazy!

Our house is one of three identical ones on our street, built in 1890. One of them just sold for 410k and is in really bad shape. (We paid 280k for ours in 2003, and that was during the last housing boom.) We're constantly getting cold calls and texts, asking if we're interested in selling. I'm sick of it. I told hubby that the next one that calls gets told that he can have it for a million bucks. Maybe one of them will be dumb enough to go for it

[Freddie]

8. My son and his wife just made settlement

But it was a tough road getting there. Every time they found a house they liked, even an offer over the asking price got turned down in favor of another buyer’s cash offer. One of the houses got 13 offers in one day. Finally their realtor heard about a house that wasn’t even listed yet (and quite a bit over their price range) and they got it. This is in Boynton Beach FL.

[WHITT]

9. Real Estate

Most real-estate analysts agree that the pandemic helped ignite the current boom as some urbanites looked to leave crowded cities like New York and San Francisco for cheaper cities or for more space in the suburbs while working from home. When lockdowns began lifting last year, home sales took off

The biggest increases were in houses above $850K.

June sales surged nearly 21% over the prior month, the biggest monthly increase on record going back to 1968. That milestone lasted only a month, when July sales rose almost 25% from June.

According to economists, you don't compare one month to the next, as real estate sales generally rise as temperatures rise and fall as temperatures fall. The proper metric is to contrast a given month to the same month of the previous year. Obviously, this can be distorted by Black Swan events.

Market watchers also say that a number of longer-term trends are at play that should keep the housing market hot, or at least steady, even after Covid-19-related demand fades.

When the federal mortgage forbearance ends, there could be a wave of foreclosures, as borrowers usually have some accrual of past due principal, interest, taxes and perhaps insurance premiums that were advanced by their servicers during the forbearance period, which many borrowers won't have.

[SoCalDavidS]

10. Bullshit!

It's the rock bottom interest rates that are fueling the market. If fixed rates were 5% or higher, people would not be able to afford the payments.

[Klaralven]

13. This -- Average 30 year fixed is 3.34%, 15 year fixed is 2.64%

Mortgage rates are at historically low prices. The lower the interest rate, the higher buyers can bid for the same monthly payment.

[joetheman]

11. Going to turn a few states from red to blue too!

[madville]

12. What goes up must come down

It's insane in my area. My brother just sold the house he bought in 2014 for 600k for 1.1 million and didn't even have to list it with a realtor, just told some people and with word of mouth had a contract in one day. My parents sold the house they bought for 169k in 2001 for 400k. I just finished a 240k home construction on 6 acres I bought for 60k a few years ago, could flip it right now for 400k in a day.

I see a few dangerous things coming, a wave of foreclosures or forced sales with little equity for the homeowner in forbearance and rising interest rates. 30-year mortgage interest rates just experienced their largest 6 week rise in history, from an average of 2.8% to 3.4%. If mortgages rates get back to 4-5% the housing market is gonna slow considerably, especially if supply increases.

[Johnny2X2X]

14. There's a housing shortage where I am

Nothing on the market to buy. Interest rates are a huge factor, but there’s more than just that too.

Work from home is a factor. Couples who work from home might be looking for more room since home is now the office too.

People who stayed employed received $3200 in stimulus the last year. For a couple of a family of 4 that was maybe $6-10 thousand. That’s money towards a down payment. Or money to pay off debt to be able to afford a house.

[MichMan]

15. They need to pass a law that any appreciation above inflation be taxed 70%

People shouldnt be able to make obscene profits due to appreciation of prices for doing nothing but just living there. This makes buying a home unaffordable for many people.

Someone buying a $300k home in 2011 shouldn't be able to flip it and sell it for double just 10 years later. That extra $300k that they made just by living there should be taxed 70%, minus inflation of course.

That would make housing much more affordable as prices would go down significantly.