We have a market not like any other.

If there is any industry that is more cyclical than the housing industry, we would be surprised to hear about it. The housing industry is subject to multiple cycles, including seasonal cycles, economic cycles, and interest rate cycles. There are even demographic cycles caused by immigration and generations like the baby boomers and more recently the millennials. But no cycles were more pronounced than the pandemic and what we will call the pandemic hangover.

The pandemic caused the mother of all boom cycles. Fueled by record low interest rates, cash from stimulus and a booming stock market – and the rush to work from home – real estate sales and prices soared. And it was not like real estate was not already doing well, before this cycle hit. The pandemic “hangover” has brought the real estate market back to earth in the past several months. But we are seeing a market that is not like the Great Recession of 2008. As a matter of fact, that recession helped cause the factor we are seeing today. What is that?

Today we still have a housing shortage—both for renters and homeowners. For the decade after the Great Recession, we did not build enough homes to satisfy household formulation. To exacerbate matters, those who bought or refinanced at record low rates are not listing their homes. Thus, we still have more demand than homes. This is supporting home prices which have risen significantly throughout the pandemic. There is no rush of foreclosures like 2008 because homeowners have equity. The conclusion is that we have a market not like any other. Plus, as interest rates have fallen from their highs, more demand is coming back into the markets. Where will the inventory come from? Stay tuned….