“Residential construction is likely to be one of the winners of this crisis,” said Esty Dwek, head of global market strategy for Natixis Investment Managers.
“Interest rates are expected to stay low even longer. So I don’t expect housing to be another shoe to drop for the economy,” added Dwek.
“The sudden rise in remote working has allowed neighborhood-priced homebuyers to expand their search into cheaper areas,” Fairweather added.
The exodus to the suburbs continues
Redfin said in its report that multimedia home sales prices increased 13% from a year ago to nearly $ 320,000, the highest price ever recorded. Additionally, recent increases in pending home sales and new home listings have been the highest since 2015.
The property market on the west coast is particularly hot. According to data from the real estate market and real estate analysis firm Meyers Research, prices for new homes increased significantly in July in Phoenix, Denver and Las Vegas, as well as in Sacramento and Riverside in California.
Meyers Research said in a report that “low mortgage rates and a desire for more space have driven many residents to become homeowners,” and residents of the more expensive areas of Los Angeles and San Francisco are the ones who go to other cities.
At some point, however, the prices could become too high. Builders may want the hot housing market to cool down a bit.
“Land is a precious and limited commodity. Builders need to be careful not to sell all of their lots too quickly, so many will intentionally slow down sales,” said Ali Wolf, chief economist at Meyers Research, in a report.
“Today’s low mortgage rates allow developers to raise prices without crushing demand,” Wolf added.
Redfin’s Fairweather is also worried that house prices may eventually get too high. This would be particularly problematic for renters who don’t have the benefit of cashing in on an existing home to trade in.
“The rise in house prices at this level is making the housing market particularly difficult for first-time homebuyers right now,” Fairweather said. “Price growth may slow down in 2021, but even if it does, high prices will continue to make affordability a concern for shoppers.”