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Good luck if you want to buy or sell a home in 2022. Mortgage interest rates are rising faster than in most previous years, adding tens or hundreds of thousands of dollars to the typical cost of owning a home. The point is not important. Because I can’t even find a place to buy it.The number of available homes is still about 40 percent lower than pre-pandemic. Good luck if you want to find a new rental property.Average rents soar to all-time highs as demand rises surge If no units are available.
To explain all of this madness, I can tell you a simple story about the housing market. end. However, zooming out brings a more precise image into focus. The 21st century is a tango between the dizzying fluctuations in demand and the corresponding swoon of construction, which has led to a historically extraordinary shortage of available housing.
The full story of the 2022 housing market begins at least 15 years ago with the burning dumpster fires of the global financial crisis. After years of undisciplined lending, the U.S. real estate market collapsed, dragging down financial markets. House prices fell six years in a row from 2006 to 2012. The number of new homes under construction plummeted to disturbing lows as the 2010s marked the worst decade on his record for homebuilding per capita.
Ten years ago, the US housing market might have seemed dead. However, several factors were intertwined to revive it. The supply of housing has nearly stagnated in the same way that America’s largest generation of millennials is in the prime of homebuying. College graduates flocked to downtown neighbourhoods, the cost of living in America’s big cities skyrocketed and pushed into the suburbs, while mortgage rates fell below his 50-year low. The combination of tight supply, soaring demand, and bargain prices is poised for a surge in home prices. In 2017, 2018 and 2019, the Case-Shiller National Home Price Index hit all-time highs every year.
Then came the pandemic. In March 2020, the economy experienced a rapidly frozen recession in the face of a virus that disrupted normalcy. The economy has stagnated and home builders have gone out of business after the 2007 housing crash. “The builder remembered what happened in 2007 and he in 2008 as a near-death experience,” financial commentator Tracy Alloway tells me on my podcast. plain englishNo one wanted a second overbuild in 15 years.
However, their expectations were wrong. catastrophically Wrong. 2020 has been nothing like his 2008 in the real estate industry. Instead of imploding, the housing market crashed in the opposite direction. The federal government has sent checks to more than 100 million households, even though the typical family is unable or unwilling to spend money on leisure experiences such as movies, vacations and amusement parks. Families with means who are tired of being stuck at home have made Zillow the new Netflix. The white-collar workforce, which has plunged into the telecommuting experiment, has driven demand for larger homes with more space for home offices.1 study A study by the Federal Reserve Bank of San Francisco found that working from home was a major driver of rising home prices.
Since 2007, supply has outstripped demand, and house prices have fallen for years. But since 2020, demand has outstripped supply.
“Windows, lumber, garage doors, roof tiles, washing machines… [suppliers were] We cannot catch up from the solid start of spring 2020,” said financial commentator Joe Weisenthal. told meIn April 2021, half of all listed homes nationwide had pending contracts within a week.1 Maryland resident infamous In her offer there is a “pledge to name her first child with the seller’s name.” She didn’t even get her house.
This madness sets the stage for 2022 to be downright bizarre. The Federal Reserve hiked interest rates again and again as higher shelter costs helped boost core inflation. It’s hard to understand how dramatically mortgage rates have changed, but this sentence might work. Just 20 months ago, average fixed interest rates on 30-year mortgages were lower than at any time on record. todayit is higher than in other months of this century“It would be crazy to sell a house now unless it was absolutely necessary,” says Weisenthal. With interest rates skyrocketing, this is not a great buyer’s market. Also, this is not a great seller’s market. Because the owner doesn’t want to double his monthly payment by getting a new mortgage with a higher interest rate. A sharp recession in 2020 has boiled the housing market, while simmering inflation in 2022 has somewhat frozen the housing market.
So far this century, first-time homebuyers have every right to feel as though they are victims of a horrifying cosmic hoax. has made millennials poorer. In the 2010s, the emasculation of the construction industry led to a shortage of new homes and increased prices. In 2020 and 2021, the pandemic brought some scare to the country, unexpectedly spurring higher housing prices and pushing prices into the stratosphere. And in 2022, mortgage rates skyrocketed from all-time lows to her 100-year highs in months. I’m not a curse believer. But if there’s one thing in this world that’s cursed, it’s his 21st-century American housing market.
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