Before the pandemic hit, the U.S. housing market saw prices skyrocket to create the third biggest housing boom in American history. Prices climbed more than 50% between 2012 and 2019.
Then came the pandemic, which caused a buying frenzy and selling freeze. This resulted in a supply-demand mismatch, which caused prices to climb even higher. The average price of a home in the U.S. is now the highest it’s ever been, surpassing the prices found during the peak of the housing bubble in 2006 before it crashed and bottomed out in 2012.
The fundamental value of a home is based upon supply and demand in a given area. For instance, if enough people want to live in the desired area but there aren’t enough homes to fulfill the demand, the fundamental value of these homes will rise.
Between 1997 and 2012, the fundamental value of living in larger cities changed due to industry success in finance and technology. People who sought high-paying jobs were drawn to these areas, but there weren’t enough homes to accommodate this new demand.
Those fundamentals made the prices increase, and homebuyers became overly optimistic. When prices began to dip and homeowners owed more on their mortgage than what it was worth, a foreclosure explosion occurred.
How does that relate to today? Demand for more space and continued remote work has made the suburbs more desirable. Today’s housing market is anything but normal, especially since it remains a strong seller’s market.
Buyers are also still in the market, which is fantastic news if you’re looking to list your home. If that’s you, reach out to a trusted real estate professional to walk you through the process of selling your home. They can also help you find a new residence.
Sources: NPR.org, Keepingcurrentmatters.com
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
