After the pandemic: Smart growth in the real estate market
The coronavirus pandemic pushed the U.S. into a state of recession with millions of citizens hungry and out of work. The real estate market in the middle of all this has boomed. Various homeowners gathered equity of more than $1 trillion between September 2019 and September 2020. This exploding demand in conjunction with a lower supply of housing led to higher bidding for the available properties and thereby sending the housing prices into an orbit.
How the pandemic affected the real estate
Reliable sources have indicated that housing prices have soared in the last year during the pandemic. The pricing of a house is related to supply and demand. When there are fewer houses available the prospects have to bid for the property and when fewer people are looking for a house the price drops as there is a lesser number of competitors. But the COVID-19 pandemic has affected both the areas of supply and demand. The growth in the value of housing is a rise in demand story. Many people are scrambling to take advantage of the plummeting mortgage prices that result in buying a home cheaply.
Mortgage rates are a record low
As the millennial generation from the U.S. has grown into their prime home-buying years, it is possible for them to take advantage of the falling mortgage rates and they are doing it. There was a 33% rise observed in the number of mortgage applications compared to last year. Two-third of the people that bought a property in 2020 made offers on homes they had not seen earlier in life. Others that were close to buying a property have jumped the bandwagon. Many of these homebuyers are first or second home buyers and this is putting a lot of pressure on the market as they are not putting up a place in the market and just are buying one.
Reduced value of amenities
There was a long-running preference for greater space and it intensified as the pandemic forced everyone to spend a lot of time at home. This also reduced the value of various urban amenities such as restaurants, cultural exhibits, and indoor gathering spaces for friends. The simultaneous pressure of these problems has resulted in many people moving to the suburban environment opting for additional space and yards for accommodating school and work. The pandemic has changed the way people think about how they wish to live in a home. But the different reports suggesting the death of cities are exaggerated. The property prices in different cities are rising with some exceptions. If you are looking to buy a property in Australia, consider Lotmix for your needs.
Homeowners are quickly becoming an exclusive club
Due to the rising demand and limited supply of real estate, things have turned in the favor of homeowners with an increase in housing values. Many people are taking advantage of the historically lower mortgage rates. Navigation through the market may have become stressful but they are getting a great deal out of it. The sad news is that a big share of American citizens is being shut away from the housing market completely. Homeownership has become related to an exclusive club that requires patrons to pay a sumptuous cover for entering and millions are being left out. Real estate is one of the smartest ways of building wealth at the moment. The number of Americans that own homes although is falling. If this trend continues over the next couple of decades, the homeownership rate of the U.S. is likely to decline and this is more likely to affect young Americans and the Black American community.
Boston Real Estate and the Bottom Line
There are many benefits associated with homeownership. But the primary benefit is wealth-building. There is stability associated with knowing that your shelter is not at the whim of a landlord. The median wealth of homeowners is almost 90 times that of the home renters. This is basically due to home equity. It also allows you to borrow money against the home value during difficult times, or help you in paying for the college fees of your children, or even start a family.