The years 2020-2024 have the best demographics for the housing market ever. We were also seeing the lowest mortgage rates ever during the start of this COVID-19 crisis when over 130 million people were still working. We also weren’t working from an over-heated housing market as existing home sales were flat for the year in 2019.
Demand for housing was strong in early 2020, before the COVID crisis hit the U.S. Mandated shut-down measures and the fear of what COVID-19 would do to our economy temporarily immobilized the market, evinced by nine weeks of declines in the weekly purchase applications data on a year-over-year basis. Then it was as if the Housing Demographic God exerted her chronokinetic powers to snap demand back to pre-COVID levels of growth. The frozen market thawed and resumed its steady pace of growth, even making up for lost time.
Instead of a housing crash, as many others predicted would be the lasting consequence of shut-down policies and massive job losses across the nation, the opposite happened as the 2020 U.S. housing market has been the most out-performing economic sector in the world.
However, we now have another issue to worry about — that is that home prices will accelerate too quickly, unrestrained by any increases in mortgage rates, which in a so-called normal economy would be able to temper this worrisome trend. As you can see below, we have deviated from the normal price growth that had been the trend in recent years.
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