Since the start of the coronavirus pandemic, the real estate industry has been in a frenzy. The housing market bucked the broader economic slowdown and set record after record on the back of limited housing supply and historically low mortgage interest rates. Data compiled by John Burns Real Estate Consulting shows just how weird the last year-plus has been in real estate.
How much did mortgage rates really affect home sales?
Home sales were strong in 2020 despite limited inventory, but record-low mortgage rates did not equate to the most sales ever.
The supply of homes just could not keep up
Existing homes for sale plunged well below the normal average, and builders couldn’t churn out new dwellings fast enough.
Consumer sentiment was clear: it’s a seller’s market
Conditions strongly favor sellers these days, so much so that in some states a majority of homes sold for over the asking price.
Builder prices keep going up
Construction costs trended upward throughout the pandemic, and have jumped significantly since the start of 2021. Builders have seen the costs of their raw materials going up, which is a major factor in consumer pricing.
Homeownership costs are closing in on rentals
The cost gap between owning a starter home and renting is narrowing, but with persistently low inventory and a pandemic-fueled glut of rental apartments in cities, it’s unclear if this trend will hold.