Residential home sales are hitting peaks last seen in 2006, just before the global recession. The Wall Street Journal reports that we are experiencing the most robust housing boom in more than a decade, boosting home values “but this time mortgages are stricter, down payments are higher, and a tight supply is supporting prices.”
The current housing boom is far more stable than the last recession and “possesses fewer systemic risks; Buyers have higher credit ratings these days. They are flusher and are putting down more cash upfront.”
Most realtor analysts agree that the pandemic helped ignite urban dwellers’ current boom, leaving crowded cities for homes in suburbs and smaller cities. “When lockdowns began lifting last year, home sales took off: June sales surged nearly 21% over the prior month [nationally], the biggest monthly increase on record going back to 1988. July sales then rose almost 25% from June.”
Millennials are currently the largest living adult generation. They approach their homebuying years with a tight supply of homes, and buyers finding themselves competing for the inadequate supply of homes, driving prices up.
Other Notable Facts
- Mortgage lenders are maintaining tight standards, even with historically low-interest rates; therefore, it’s not easy to access credit.
- Some first-time buyers are pricing them out of the market.
- Current homeowners facing foreclosure can sell their houses for profit rather than face foreclosure.
- Financial firms are packaging mortgages as securities; the “vast majority of those mortgages today have government backing.”
- U.S. house prices soared 10.8% in the fourth quarter of 2020 over 2019, the biggest gain since 1998.
- Market watchers predict that long-term trends may keep the housing market “hot even after the Covid-19 demand fades.” With expectations for continued buyer demand, sellers have the advantage in 2021.
Suppose you have thoughts about selling your home. In that case, I can help you assess the cumulative impact of these changes, estimate potential proceeds of selling your property, and plan tax-savings and estate planning strategies.
Research and data extracted from The Wall Street Journal, Real Estate, reported by Nicole Friedman, March 15, 2021.