“Housing is probably going to emerge as one of the winners of this crisis,” said Esty Dweck, head of global market strategy for Neti Dvesk Managers.
Dweck said, “Interest rates should continue to decrease for even longer. So I don’t expect housing to be another shoe for the economy.”
“The sudden rise of remote work has allowed homebuyers, who price out of a neighborhood, to expand their search to more affordable areas,” Fairweather said.
Migration to suburbs continues
Redfin said in its report that media home sale prices rose 13% to nearly $ 320,000 from a year ago – the highest price on record. What’s more, recent pending home sales growth and new home listings were their highest since 2015.
The housing market on the West Coast is particularly hot. According to data from housing market and real estate analytics firm Meyers Research, there was a solid increase in prices for new homes in Phoenix, Denver and Las Vegas in July as well as Sacramento and Riverside in California.
Meyers Research said in a report that “low mortgage rates and a desire for more space have pushed too many residents into homeownership,” and residents in the Los Angeles and San Francisco areas are leaving for other cities.
At some point though the prices may be very high. Builders want the red-hot housing market to cool down a bit.
“Ali Wolf, chief economist at Meyers Research, said in a report,” Land is a valuable and limited commodity. Builders have to be careful to sell through all theirs.
“Today’s low mortgage rate allows builders to raise prices without crushing demand,” Wolf said.
Redfin Fairweather is also concerned that house prices may eventually be too high. This would be particularly problematic for renters who do not have the benefit of having cash on an existing home to conduct business.
“Home-price growth is making this high housing markets particularly difficult for homebuyers at first,” Fairweather said. “Price growth may slow in 2021, but even if it does, higher prices are going to continue to drive profitability for buyers.”