≈ What do you get when supply takes a nosedive? ≈
Guess which asset didn’t get touched during the pandemic—residential real estate. Not only did housing prices not turn lower, in most cases, they rocketed to the moon. It’s undoubtedly a win for homeowners. Home equity is multiplying. And, historically low interest rates allowed for refinancing and the reduction in borrowing costs.
If you thought consumers were chomping at the bit to spend money from their “stimmy” checks and pent-up savings from the shuttered economy, just wait till they start tapping into home equity loans.
But, as is often the case, there are winners and losers. Would you want to be a first-time homebuyer without a mountain of built-up equity in your prior residence to chip away at these sky-high prices?
“Mr. Zandi, at Moody’s, said he wasn’t yet anxious about a looming disaster like the last housing bubble. But he says it is already worrisome that rising prices have boxed out many first-time and moderate-income home buyers, who for years to come may lose out on the benefits of locking in interest rates below 3 percent.” Source: NYTimes
Next time you see a first-time homebuyer, hug them.
Chart of the Day
Home Supply is Cratering in Major Cities
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