The spike in US real estate prices has forced thousands of buyers into grueling, often risky bidding wars, raising questions about whether this country is experiencing a real estate bubble.
The writer said Sylva in Line, in a report published by the newspaper “The Hill” ( The hill ‘s American), said that low mortgage rates big federal stimulus and closures and remote work, since nearly a year, led to a rapid increase in demand for homes. Read also Moving towards alternative energy .. How will Biden’s election affect the oil market?The US economy is at stake … 5 things to watch in 2021America … The wealthy are hiding large amounts of income from the tax authorities How trillions Biden help the global economy?
Meanwhile, the Corona pandemic has exacerbated the severe housing shortage, as a result of significant delays in building new homes and keeping some potential sellers on the sidelines because they were afraid to allow strangers to roam their homes during the epidemic.
The writer stated that the average home price rose in April by 20%, to $ 347.5 thousand, compared to last year, and the average home remains only 20 days in the market before selling, according to data released on Friday by Redven, a real estate listing website.
House prices rose 12% year-on-year in February, the fastest rate since 1996, according to the most closely watched S&P CoreLogic Case-Shiller home price index reading.
“We’ve kind of exacerbated the market disruption,” said Mike Frattantoni, chief economist at the Mortgage Bankers Association. “Demand was really strong while supply was incredibly tight.” “We have entered a year of record low levels in the number of available properties, and that is really what is driving the extremely rapid growth in house prices,” he added.
Buyers with savings or real estate assets have contributed to maintaining pressure, and bids above the asking price are common, and those who cannot outbid competitors have increased prices by waiving screening requirements, restructuring bids while offering better immediate incentives to sellers.
According to experts, there is no clear end in sight to the massive home purchases, but they do not see the same warning signs that preceded the collapse of the housing bubble in the mid-2000s.
Despite falling mortgage rates, lending standards have tightened dramatically since the recession of 2007-2009. The Dodd-Frank Wall Street Reform Act of 2010 imposed stricter requirements for home loans to avoid another foreclosure crisis. Banks were also wary of lending to all buyers for lack of Certainty associated with the pandemic. Advertising
Reggie Edwards, a Redven economist, was quoted by the writer as saying, “A lot of the people who buy today are among the most creditworthy people in mortgage lending history, have the highest levels of savings and take out loans that provide the largest collateral rate of ownership because they give out a lot of money up front,” I don’t think we have any concerns about whether people can save on the price of the homes they buy now, compared to 2006 and 2007. “
Edwards added that, unlike the current market, where demand for homes far exceeds supply, the foreclosure crisis was driven in part by lenders’ urging families to buy surplus homes they could not afford, and which buyers interested only in speculating made them more expensive.
For its part, the federal watchdogs have expressed confidence that the housing market will not balloon to dangerous levels similar to 2007, and Federal Reserve Chairman Jerome Powell told reporters Wednesday that while the sharp rise in housing prices is not entirely good, the Federal Reserve has not noticed signs. Financial instability or increased risk. However, he expressed concerns about the number of potential first-time buyers who could miss their opportunity to make a significant investment after a crisis that has widened the wealth gap significantly.
A glimmer of hope
Industry analysts and advocates of affordable housing see some hope in President Joe Biden’s $ 2.3 trillion infrastructure budget proposal, which includes 213 billion in tax credits, federal spending and grants aimed at building 2 million affordable homes and apartments.
Housing construction has rebounded in recent months, and a gradual easing of coronavirus restrictions may prompt buyers to stay in urban centers that saw little displacement earlier in the pandemic.
But intense demand continues to put pressure on housing shortages, which could deny a growing number of Americans home ownership with years of potential repercussions. The situation is particularly worrying for Hispanics and blacks, who have been deprived of the housing market for decades due to racial discrimination. Family wealth is much less than white because of this.