Home Sweet Home
Before the COVID-19 pandemic that began nearly a year ago, the housing market wasn’t looking so hot. You may think the pandemic would only make things worse, but that was far from the truth. Despite the pandemic costing millions of jobs and hurting the economy, millions of house hunters are actively using an online platform such as Zillow to browse, plan their move, and, in many cases, buy their first home. But behind this mass searching for homes, there is an underlying trend that is interesting: More than a quarter of homes for sale in America haven’t been built yet. That’s right; people are buying homes before they are even existing. According to the Census Bureau, 307,000 homes were on the market at the end of January, but just 42,000 of them had been completed—at 13.7% of listings, that’s the lowest percentage on record. Nearly twice as many listings—81,000, or 26.4%—were being offered before the ground had been broken. So why are houses that aren’t built yet better? Well, for one, you can often pay a similar price yet have the home customized as well as brand new, two major perks that people seem to be valuing. Moreover, due to COVID’s at-home orders and the necessity of a quarantine, having a home is more valuable than ever.
Despite this increase in sales, the trend may not last. In the short to medium term, sales may fall due to lack of supply and a prolonged economic recovery; this comes in addition to prices steadily increasing over the past few months. Eventually, every transaction comes down to the basics of supply and demand economics. In the longer term, many experts point towards millennial buyers and how millennials prefer to rent than to buy and place that extra cash towards experiences such as traveling. All in all, Zillow projects home sales are taper off through 2021, yet maintain above pre-pandemic levels.”
Would you buy a house now? And how do you think the housing market will play out over the next few years?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.