The North American housing market has seen significant shifts since the start of the COVID-19 pandemic. US real estate prices were already high and have seen a peak in the last year unlike anything the market has witnessed in many years.
An Insurify analysis of the cities with the greatest pandemic real estate booms found that between April and July 2020, the average rate of home sales had increased, exceeding the previous year’s rate by 66 percent.
Likely homeowners have been relocating to the suburbs in record numbers. That’s partly because housing preferences have shifted: more people are choosing a larger living space over proximity to the “action” of a city center.
Driven partly by Millennial mentality, the market has become a battleground for dream homes – buyers are being bullish – and the result is skyrocketing real estate costs.
As the virus distrurbed the economic stability of entire nations, the housing market in North America remained remarkably stable, seeing a 13 percent increase last year.
The 2020 real estate market has proven that many interested homebuyers will invest in a new home even during a time of economic pessimism, often by looking for homes in more affordable areas.
To understand the changing priorities of home buyers and those preferences are reshaping the real estate market, the research team at Insurify examined data from Zillow.
On average, those who moved to a new city in 2020 ended up in a ZIP code with average home values nearly $27,000 lower than in their previous ZIP code, according to Zillow.
Those who changed homes in 2020 also moved to ZIP codes where the average home sold was 33 square feet bigger than their previous home, Zillow reported.
“What that suggests to me is more movement away from the more expensive housing markets in the country,” Jeff Tucker, a senior economist at Zillow, said in a KXAN story.
But what will the remaining months of 2021 mean for the market?
There are some signs that the US housing market is moderating after months of surging prices. Now that inventory is near record lows and prices are climbing at the fastest rate ever, buyers have had enough, according to Business Insider, and are forcing the market to cool by simply saying “no” to high prices.
Although sales of new and previously owned homes are still above pre-pandemic levels, the numbers have slowed from the peaks in fall 2020 thanks to a dwindling housing supply.
“The steady decline suggests the market boom could be normalizing,” the article said. “It also comes as median selling prices for new and existing homes sit at record highs, presenting an affordability problem for buyers just entering the market.”
Americans’ attitudes about housing have hit rock-bottom. In a survey from the University of Michigan about consumer sentiment, 54 percent of Americans polled said it was a bad time to buy homes in May. That’s the most pessimistic outlook since 1982.
This slowing down of the housing craze of the last 12 months is leading economists to believe that 2022 will be a markedly more modest market.
Also among economists’ varied concerns is housing price inflation – and the belief that inflation could be tempered by a number of factors as the dust settles from COVID.
Still, some believe that Millennials – who now have buying power and are in the hunt for their first homes – will help cushion the market.