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The aftermath of the COVID-19 crisis, plus solid housing demographics, has created a genuine problem with housing inventory. Record low inventory has resulted in a hectic housing market with forced bidding becoming typical rather than the exception.
One of my biggest concerns for the U.S. housing market from 2020 to 2024 is that price growth could push higher than we had seen in the previous decade. In February of 2020, housing demand started to pick up. This was a real breakout in demand due to improved demographics for home buying, but because we received this data in March when we were in the throes of the COVID-19 crisis, no one seemed to notice.
The social and fear-driven shutdowns caused a freeze in purchasing activity. Still, after a few weeks, housing market demand trumped COVID-19 fears, and housing had an epic V-shaped recovery in purchase applications. The rest is history.
However, this hot housing market is not accompanied by a credit boom because the actual number of sales is up only slightly. The raw shortage of homes on the market is why buyers face multiple-bid situations for any home.
This downtrend in inventory started in 2014, and not even 5% mortgage rates budged the data too much higher.
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The post What will fix the housing market inventory shortage? appeared first on HousingWire.
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