When global pandemic struck in 2020 the result was an economic upheaval and great uncertainty. Perhaps the most surprising effect, as far as the economy is concerned, is the rapid increase in house prices across America. In some markets, the prices went sky high. This increase is usually explained through the move towards virtual work, and as a consequence, it was expected that the prices would go down once the stability returns. However, due to the costs of construction, which still remain high because of supply chain issues, this cooling down of the real estate market failed to materialize.
- Housing prices are surging to numbers greater than that in 2005/2006, leading some to think that we’re in a housing bubble again.
- Since wages are not increasing at the same rate as housing prices, this increase is not sustainable.
- In addition, the cost of both building materials and the construction itself are increasing.
“This cycle’s boom is driven by supply and demand, rather than speculative gambling. Supply is tight, and demand is high. The pandemic caused a whiplash in our economy – at the onset of the pandemic there was prolonged uncertainty and many businesses delayed plans, laid off workers, and cut back spending.”