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Housing Market Euphoria Craziest In Years As Inventory Sinks To New Low

The housing boom sparked by the Federal Reserve during the virus pandemic was built on historically low mortgage rates (thanks to Powell), and accelerated by a combination of record low inventory as city-dwellers moved to rural areas amid remote-work phenomenon. 

According to Zillow Group Inc, the past year has been the hottest real estate market since 2007, with median sale prices in dozens of metro areas recording double-digit percentage increases from a year ago. Simultaneously, the number of homes for sale in March was approximately half of what it was a year ago, according to Realtor.com. 

This means that record-low inventory coupled with low mortgage rates has resulted in about 59% of homes that recently went under contract had an accepted offer in under two weeks of being listed, a record said the Redfin report.

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  1. Rising house prices, bidding wars to artificially push up house prices way over selling price, low mortgage rates to intice more people to get on the market, low inventory…

    BOOM! Housing bubble in the midst

    Is it going to burst? I think so. We are in the midst of a mild recession, which will be made worse later on down the line once stimulus checks end, and people are crazy enough to get themselves into serious amounts of debt. Do they think they can afford these ridicously over priced houses? Mortgage forebearances are at a record high but evictions have been halted due to the government banning it due to the covid pandemic. Once the stimulus ends, evictions take place, defaults on mortgages will be at their highest ever and this will crash the market.

    With inventory falling even further will cause even further rise in house prices. More bidding wars will then take place for desperate house buyers. House prices are too unstainable and the market can’t keep overheating. Either it cools down or explodes. I don’t see it cooling down if prices keep going up. Prices need to level off at a reasonable level for that to happen.

    Over 11million homes sold over the last two year. Hence the low inventory. Not many people will be able to keep up their repayments and the tsunami of mortgage default will come flooding in not on just those recent house buyers but those who have been on the market for a few years. This upcoming recession will be hard and many people are ignornant that it will not come as they are worried too much about the now.

    Nobody learned from 2007. Those who ignore history are doomed to repeat the mistakes of the past.

    Like

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