Key Highlights

  • Only about 50% as many homes for-sale now than last winter, according to Altos Research
  • Lack of for-sale supply = rising home prices while increased rental supply = falling rents 

Many Americans Staying Put While Home Prices Soaring

While the supply side of America’s housing market has been eroding steadily since 2015, according to Altos Research,a nationwide housing market data company, 2020 saw a record decline in for-sale inventory.

And why not?  With Baby Boomers being the majority of homeowners in the US as well as at heightened COVID risk, it’s not surprising that Boomers decided to stay in their homes and not free them up to new families.  Likewise, with nearly 40% of the labor force now working remotely, who would want to commit to a “forever home” by selling their starter homes when no one knows the future of remote work in the coming 6 to 12 months?

With such record inventory declines, for-sale home prices have soared. Median sales prices in some areas are up +15% or more in just one year, according to CoreLogic, Moody’s Analytics and The National Association of REALTORS®.

Lower Rents Directly Tied to Pandemic AND More Investment Opportunities

During the last decade, the number of single-family homes in the rental market increased by more than 7M.  Adding to this rental investment opportunity is the boom of companies such as Airbnb that enable individual owners to make money off their now considered investment properties

Once COVID hit, laid-off workers who were formerly renters moved in with family or friends.  Students stayed at home instead of renting near campus. Anticipated new urban renters such as recent college graduates, immigrants or workers with new jobs didn’t show up in cities.  The result? Cheaper rents in close-in urban neighborhoods.

This Housing Market Different than Other Recession Housing Markets

According to Jenny Schuetz, a researcher with the Brookings Institute, “I don’t think we’ve seen a housing market quite like this one…other recessions looked a little bit different, so that makes it hard to know what’s going on.”

Mark Zandi, chief economist with Moody’s Analytics, told The New York Times that he’s not yet anxious about a looming disaster due to lack of for-sale inventory.  “But,” Zandi said, if we have another year like we had in the past year, we’re going to have a lot of red flares going up.”

Unclear Where Inventory Can Be Shaken Loose

Some inventory possibilities may come from:

  • More new home building (but that will take years)
  • Boomers will get vaccinated and may decide to move
  • Mortgage forbearance relief will end at some point
  • Some of millions of single-family rental conversions may be put on for-sale market
  • Pandemic will eventually subside and workers will become more certain about remote working

Typical Spring Surge in Inventory May Not Materialize

Michael Simonsen, CEO of Altos Research, said that housing inventory “usually” hits a low in late February and then begins to rise in early-mid March.  That “usual,” however may not happen this year.

Simonsen said, “We haven’t hit the (inventory) trough yet.  I’m frankly worried that it doesn’t climb from here.”


Thanks to CoreLogic, Altos Research, the National Association of REALTORS®, Moody’s Analytics, Brookings Institute and The New York Times.


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