How Has COVID Changed the Housing Market?

Two years ago, the housing market was going along predictably, with prices and sales behaving as expected. Suddenly, in 2020, the COVID pandemic burst into the scene and everything changed. The stay-at-home directives spread confusion, with most people putting off any long-term housing plans. 

 

There was no warning, and no one anticipated the changes that were to follow. More than one-and-a-half years later, the housing market is yet to find its footing in most locations. However, many locations are experiencing a surge in housing demands for different reasons. 

 

Home Ownership Demands

The locations currently experiencing a surge in housing demands credit both economic and emotional reasons for the changes. On the economic end, low mortgage rates are driving people to start taking homeownership more seriously. 

 

On the emotional end, being in lockdown in the house for months on end has driven many people to become weary of their current homes. COVID has changed the housing market with the desire for more space and something different. 

 

The Low Mortgage Rates

COVID resulted in historically low mortgage rate levels. In some locations, the mortgage rates fell more than 10 times during the past year. Governments went to great lengths to reduce the damage caused by the economic recession. It established a broad range of actions to support the low mortgage rates. 

 

Buying a home became more affordable for many people who were looking for more space. While the rates have edged up in recent months, many forecasts suggest that the housing market is far from normalizing. 

 

Changing House Preferences 

In the wake of the COVID lockdown, many people are realizing that they do not love where they live. The ability to work virtually has also meant that people do not have to live in specific locations because of work. 

 

Working from home has allowed home buyers to look for housing further from metropolitan locations. Spending so much time in the home has made people re-evaluate their housing needs. There is a rising desire for more space, with people looking for homes that have outdoor space and home offices. 

 

A Housing Shortage

The pandemic revealed an unprecedented housing shortage. Before COVID forced stay-at-home directives and closures, the inventory of homes available for sale was already low. The pandemic accelerated this shortage. 

 

Higher prices of building materials led to a huge increase in construction costs. The high cost of construction translates into the high cost of the new houses. The re-opening of the economy has seen the cost of materials beginning to come down. However, many home builders are still struggling to access available building materials. 

 

Surge in Home Equity

The COVID pandemic led to a surge in home equity by the end of 2020. This has been beneficial as homeowners have enjoyed the housing boom. Life has largely gone back to normal for many, but people are still experiencing some of the changes in the housing market. 

 

The housing market will likely continue to strengthen, and home sales will continue to go up. Many people are looking to buy homes, but there are few homes available for sale. Staying informed on the economic conditions will help provide valuable guidance during this peculiar market environment. 


 

For more on changes in the housing market, contact Pacific Real Estate Group at our office in Rancho Cucamonga, California. You can call us at 888-452-0974 today to schedule an appointment.