“Some 5.6 million single-family homes sold last year — more than at any time since the housing bubble — and the prices of those homes were up 9 percent from a year before, according to the National Association of Realtors. The organization expects average housing prices to go up another 9 percent this year — another huge jump from the typical 3-5 percent annual price growth and far above the rates at which people’s income is rising.
Though not the root cause, the pandemic did accelerate those costs, as schooling and working from home made having a nice, large living space all the more important.
“It has reminded us all of the importance of home and how essential it is to have a safe space of shelter from the outside world,” Zillow Group principal economist Chris Glynn told Recode.
The pandemic also allowed subsets of Americans who remained employed — usually those who were more gainfully employed in the first place — to save money for a downpayment, as there was less for them to spend their money on.”
“The reasons are demographic as well. Millennials, who make up the largest living cohort, have arrived at the age where they’re forming new households and buying their first and even second homes (though that milestone happened later than in previous generations). And as millennials with growing families flock to the housing market, the supply of homes has not been enough to keep up.
Many people, including older Americans who don’t move as much as young ones or who were afraid to let people visit their homes in the pandemic, are holding onto their homes longer, meaning many existing homes — which make up the vast majority of home sales — have not been entering the market.
Additionally, new home construction, though it has ramped up lately, has been depressed since the Great Recession devastated the construction industry. High lumber prices are also delaying and driving up the cost of new housing.
Finally, investor interest in renting out single-family homes as an asset class has led them to buy up much of the housing stock that individuals once would have. Buying homes to rent means there are fewer to buy to live in, which, by extension, has led more potential buyers to rent.”