Home prices continue to rise even now. According to research by NY Rent Own Sell, house prices have risen about 15% over the past year. The fact that houses are now so expensive is simply the result of the problem of supply and demand. Miller, who said he was “excited to see rates rise, noted that “5 percent mortgage rates are not a bad thing in terms of sustainable housing markets.
Not only are buyers grappling with all-time high prices and crazy competition, but they also don't have much time to make up their minds. The rise in property prices has proved problematic for everyone looking to buy a property recently. Because property prices are a function of rental income multiples, a real estate buyer should look to buy at similar price discounts from peak rental periods. Add in the trend of remote work and the pandemic-induced exodus from some expensive areas of the country and you get one of the craziest housing markets in history.
That could keep prices under control, since most buyers have a limit on how much they can spend each month on housing. It can also allow you to borrow against the value of your home during difficult times or help your children attend college or start a family. Rising mortgage rates (which have gone from about 3.3% at the beginning of the year to about 6% in six months) is likely to take some buyers out of the market and slow down rising home prices. In particular, the current homeownership rate for black households is even lower than when fair housing laws were passed in 1968, researchers write.
Income and wealth inequality, which will be exacerbated by the past year, when those at the upper end of the income scale quickly recovered from the financial shock (and, according to some measures, are even doing better) and those at the lower end face permanent job losses, long-term housing insecurity and food insecurity. Today's market differs significantly from what happened 15 years ago, when high home prices were driven by lax lending practices and rampant investor speculation in the market. The problem with unprecedented mortgage rates is that thousands of Americans are tempted to buy too many homes. In this pandemic-driven era, it's easy to forget that the extremes of today's housing market, such as having to make an offer well above the sale price and agree to give up all contingencies, before an open day ends, are simply not normal.
Experts and activists across the political spectrum disagree on the best way to solve these problems from a market-based vision of simply allowing as much market-price housing as possible for leftist dreams of a public housing utopia. Some people think it's a bubble because prices are rising so fast, but there are so many other variables at play that I would call it unhealthy rather than euphoric. This seems like a once-in-a-lifetime change in home prices that will make homeowners much richer and those who want to own a home in a much more difficult situation.