The housing market right now is insane and comedians are having a field day. A cartoon floating around Facebook has a man and woman looking over a fence at a dog in a doghouse saying, “ We’re prepared to make a very attractive offer for your house.” SNL did a skit that compared Zillow to a porn site. Even Raleigh’s Holderness clan got into the act, ridiculing the speed at which houses are selling when they hit the market and the things buyers are offering to get them.
As somebody in the real estate business, it’s a bit disturbing. A lot of buyers are leaving the market, either getting priced out or worried that we’re in a bubble that will leave them with a house that is underwater in a few years. Listing agents, though, are having a field day. Houses are rarely staying on the market for more than a day or two before sellers get multiple offers. One house in Carrboro sold for $100,000 over the asking price.
In a lot of cases, the buyers are paying cash for houses that seem to be inflated. In North Carolina, a lot of those people are coming from markets like California and New York where housing prices are much higher. Houses that seem overpriced to buyers who’ve been living here are bargains to people who’ve been living in markets where the median cost is three or four times higher than those in North Carolina. A lot of these cash buyers are just looking for investments, denying opportunities to prospective homeowners.
But it’s not just existing homes. Builders can’t keep up with demand, either. To make matters worse, the price of construction materials is insanely high, pricing people out of the new housing market. In parts of the Triangle, developers of subdivisions have had to stop selling lots because they can’t build fast enough.
The question is what happens. Does the bubble burst, leaving people with houses that aren’t worth what they paid for them? Or is the price of housing just going flatten out over the coming months, leaving people who held onto their houses with considerably more equity? Or will inflation essentially obliterate the gains?
The chief economist for the National Association of REALTORS predicts the situation will return to normal later this year. As more people get vaccinated and leave mortgage forbearance programs, more houses will come on the market. They will move for jobs and other reasons, increasing the number of houses on the market. In addition, economist Paul Krugman says as the impact of stimulus funds dies down over the course of the next year, the demand for building materials will likely decrease also, lowering building prices, too.
The market right now is reserved mainly for those with a lot of money, leaving first-time homebuyers in a pinch. That’s bad news for the millennials who already make less money and carry more debt due to student loans than previous generations. If houses are the chief means to creating wealth, they’re losing out again. Millennials and those younger now make up a majority of the population. Between the economic collapse, rising college costs and the pandemic, they’ve been dealt a bad hand. Their reaction to these situations created by their parents’ generation will shape the future of the country.
Thomas Mills is the founder and publisher of PoliticsNC.com. Before beginning PoliticsNC, Thomas spent twenty years as a political and public affairs consultant. Learn more >