The notion of ‘home sweet home’ was one of many concepts taking on new meaning in the wake of the COVID-19 pandemic as people sought refuge from the deadly virus with many workplaces closed. The latest developments in the housing market are discussed in the latest edition of “On The Money” with housing market expert Rick Sharga. As an executive and spokesperson for RealtyTrac, Sharga first rose to prominence as an expert during the housing market collapse and subsequent financial crisis over a decade ago.
While noting that there are “superficial” similarities between the previous sharp rise in home prices that ended badly with millions of foreclosures in 2008 and the current situation, Sharga says it is highly unlikely that the market melts again in the same way in the short term (2:15). This time around, he notes that supply and demand are driving up house prices as older millennials enter the market. âHistorically low mortgage ratesâ are another factor, he says.
Additionally, Sharga says that 70 percent of people who buy a home in the United States are “moving buyers,” or those who move from one home to buy another (3:35). Helping to prevent another similar collapse, Sharga notes that the reforms – some imposed by law with others by the industry – have combined to result in better quality mortgages (4:40). It also means that it has become more difficult to qualify for a home loan.
Speaking of a hot regional market, Sharga cites figures that the median home price in the state of California is $ 800,000, which he calls “mind-boggling.” One of the impacts of this, Sharga says, is that a generation of potential young buyers is being shut out of the market. For those who can afford it, however, Sharga notes that house prices tend to rise over the long term (6:10). In the short term, he recalls, house prices can go up and down, and people “have to be prepared for that kind of volatility” (7:45).
As the pandemic has shaped the demand for housing in suburbs, remote suburbs and “second-tier markets” (in terms of size), including Nashville, Tennessee; Tulsa, Oklahoma; and Columbus, Ohio; have benefited (10:00 a.m.). It also affected commercial real estate, including office buildings, where suburban properties held up better.
Ultimately, Sharga argues that young Americans still aspire to homeownership, which helps support the housing market (12:40). And as we always remind people, you are better off looking for the best mortgage rate.