According to an article in the wall street journal world-wide house prices are rising due to pandemic-related stimulus, low-interest rates, and changes in buyer behavior.
Although some fear another 2006 bubble, in most countries, economic policy has been manipulated to keep interest rates low in order to assist recovery. Efforts to increase interest rates and tighten lending policy have had little influence as housing demand continues to outpace supply.
Unlike in the big recession, Buyers have good credit, pandemic generated savings, more cash to put down and lending policies are tighter. Loan portfolios are stronger.
Quarantine requirements, home offices, and classrooms have led folks to revisit their housing needs. Families can often be more flexible to live outside of metro areas. As Covid cases start to lessen and vaccinations increase, consumers are more optimistic and after a year of reduced spending, they have cash in hand.
Hot markets may stable out naturally, especially in Idaho, where out-of-state buyers are fast approaching a saturation level in their equity compared to prices in Idaho.
You may have observed that land listings have been selling in days. However, in recent weeks as prices have risen, some of those listings are starting to sit a little longer. The 2020 double digit price increases are expected to soften to single digit increases as interest rates begin to rise.
Lead HousingWire economist Logan Mohtasham, on the RESource (here is a link to his interview https://www.facebook.com/watch/?v=173996237650184) predicts a very strong housing market over the next 3-4 years.
He believes, between low-interest rates and demographics there will be no shortage of demand in the coming years. As the age group, 27-33 are the up and coming generation to need housing, representing 32.5 million Americans
"The recession is over" there is no economic evidence that we will be facing damaging inflation rates. According to Logan, an increase in interest rates is to be expected since the dramatically low rates were influenced by unnatural market conditions (pandemic). A slight rise in interest would work toward stabilizing the housing market which would be good for everyone.
10 years ago, the average homeowner stayed in their home for 6-7 years. That has increased to 10 years. Between the increasing longevity and the fact that builders cannot keep pace with demand, supply is expected to remain diminished.
"Emerging technologies and the demographics are only two of the factors supporting a strong economy. Americans have been saving more strongly in the past year and now that the economy is opening up those folks will start spending."
Want to know the latest trusted source information on real estate? Garden Valley Properties has its pulse on the market - We can help !