Key Highlights
- Total value of all homes in US increased $2T to total of $31.4T in October 2020
- This $31.4T is increase of +6.7% from estimated $29.4T pre-pandemic in February, according to Redfin
- Home owners more wealthy while making home purchasers more and more unable to attain ownership
Due to high demand, low supply and low mortgage rates, home prices are higher than ever before. And for every $1,000 price increase, an additional 150,000 potential homebuyers are priced out of the market, according to the National Association of Home Builders.
Median home prices have been hovering at $350,000, an increase of +12.9% for the week ending October 24 compared to last year, according to realtor.com. “If you keep pushing prices,” said Ali Wolf, chief economist at Meyers Research, “you’re pricing people out. There’s no way around that.”
Redfin’s economist Schery Bokhari said, “It’s almost like there are two different classes – people who own wealth are really benefiting and those who are now unemployed or have experienced loss of income and being left behind. They’re missing the boat.”
Multi-family housing investor Grant Cardone told Yahoo Finance, “Homeownership is…dead in this country because the only people that are buying homes right now are people that have equity, great credit and a job. We’re going o become a renter nation in this country as renting will become the economic…desirable choice…”
Clearly, the housing market is not waiting for the labor market “catch up” or to recover. Home price gains were larges in small, affordable markets such as Milwaukee, Charlotte and Austin where values have increased +10.4%, 10.2% and 10.3% respectively compared to last year in October. Based on total dollar gains, Los Angeles homes appreciated +4.3%, or $82M, the largest dollar gains of any market. Washington DC and Seattle also had big large-dollar gains.
Bokhari concluded his remarks by saying, “If home prices are rising, usually incomes are also rising and people have jobs so they can participate in the market. This cheaper debt was an opportunity they could have enjoyed, but not now…this…situation is really causing a divergence from the (economic) path that we were on (pre-pandemic).”
Thanks to Yahoo Finance.
Also read: Rents Rising in SOME Places, Inman Handbook – Becoming a Luxury Agent, The Shape(s) of the Economy Six Months In
