Experts say the current housing market is hot, almost being on fire in locations with low COVID-19 cases, as demand for housing has risen amidst the pandemic. But what is the reason for this kind of phenomenon within the housing market? Should you be worried about this?
Hot Housing Market of Today Is Due To High Demand, Experts Say
It might sound weird for the housing market to have a high and hot season amidst the pandemic, but that is exactly what is happening right now. According to Cision PR Newswire, there is a significant increase in pending home sales throughout the whole country. The said increase amounted to 54.1% this year alone and this has been noticed in many counties in the United States with a low number of COVID-19 cases.
The report has been based on the analysis of numerous counties over 116 metropolitan areas. Most counties with a low number of COVID-19 cases have ranked in the bottom 20% by cases per capita. Thanks to that and the record-low mortgage rates that are present in the housing market today, the demand has increased as a result. Add to the mix the increased migration due to their work, and this is why the demand for housing has suddenly skyrocketed even at these times.
In counties with low numbers of COVID-19 cases, the listings for new homes in the market have increased by 20.6% year over year. This is a notable difference when compared to the 12.6% year to year for counties with high numbers of COVID-19 cases. However, the gap between the two was very stark in April this year, and the main cause of it is due to the strict restrictions placed by the national government to combat the pandemic.
Even With This Surge, Many Are Fearing for an Another Housing Market Crash
Not all people are happy about the sudden rise in demand in the housing market. According to DW, many global experts are worried that a housing crash similar to what occurred in the United States a few years past might happen to other countries as well. They worry they have is due to the stimulus/support packages being given by most governments around the world are expiring.
They even say that the said package in some countries is the major cause of inequality in the housing market today. Listed below are the problems that stimulus/support packages from governments are bringing to the said market:
- Many homeowners' borrowing power is underpinned.
- It also underpins the guaranteed shareholder profits.
- And the sustainability of bank balance sheets is put into jeopardy.
- It greatly impoverishes many home renters.
- Makes it more difficult for a person to get onto the property ladder.
They further add that half of 25 major cities globally are a high risk of having a housing bubble burst or their housing market to be overvalued. This is what the report from the Global Real Estate Bubble Index 2020 says. It also says that the common signs of an incoming housing bubble burst are starting to show -- from excessive lending and/or construction activity to the decoupling of prices from local rents and incomes.
