It’s an undeniable fact that the housing market surpassed all expectations during COVID, and there’s no doubt that this was partially a result of supply-side shortages, record-low mortgage rates, and a relatively small shakeup in terms of earnings for high-income households. However, an overlooked aspect of the housing boom is that there simply weren’t a lot of big-ticket items to spend chunks of disposable income on; the net result was a laser-focused obsession with a given property, and a willingness to do whatever it took to get that property (including offers well above asking price). This reality begs the question: when things reopen, and society has more options on how to spend their somewhat-limited cash on, will we see the housing market cool down? The answer is probably, but not by much.
While macroeconomics is not beholden to individual mood swings, it can be impacted by spending patterns of a large number of people; as far as COVID is concerned, a very large number of people will have similar feelings. If you’re reading this, there’s a chance that you are currently feeling, or have recently felt, pent up; the notion that things will return to normal creates a veritable buzz of excitement in the air. When COVID restrictions lift, it’s likely we will see something akin to the last day of the school year; people will rush out of their doors, eager for an adventure, adult adventures cost money. An example of things that may occupy peoples’ limited cash, the European Union (“EU”) recently stated that Americans, who are fully vaccinated, will be allowed to travel there.
To be clear, this article is not suggesting that the heyday of the housing market is coming to an end, the worst we will see is a slight decrease in the housing-fervor that has gripped the country over the last year. The rate of growth for housing prices will decrease, as was always expected, but the housing market remains a lucrative investment.
At the Chernov Team we understand that knowledge is power, and knowledge of how external factors impact the housing market as a whole is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.