Two Years Into Low Inventory and Rising Prices—and Still No End Is in Sight
Over the past two years, the COVID-19 pandemic hit the housing market hard, upending everything from housing supply to the median home price, but according to The New York Times, no quick reprieve is in sight. Increased housing construction throughout 2022 will add some affordable housing to an overpriced market, but builders will likely struggle just to break even with soaring demand and a decades-old housing deficit.
Though home prices are still rising, buyers are showing no signs of backing down despite heavy competition from new market players like all-cash ‘iBuyers’ and institutional investors. As unfavorable market conditions are sustained for the second straight year, first-time buyers will likely have the most trouble finding and purchasing available homes.
“My pessimistic view is that the economy is perfectly capable of running with unaffordable housing,” said Daryl Fairweather, the chief economist at Redfin. This was evident over the last decade, she said, when affordability worsened even as the economy continued to grow. And that reality has enabled politicians and the public to largely neglect the issue of housing affordability.
“Another way to phrase that is people will still get up and go to their jobs, even if they’re housing insecure,” Ms. Fairweather said. “That’s one reason to think we’ll still just keep letting this problem get worse.”