- Low mortgage rates and the remote-work boom fueled home-buying during the pandemic.
- The frenzy has depleted inventory, sent home prices soaring, and anointed new hot places to live.
- This guide lays out the facts to know to help decide if you’re ready for homeownership.
- See more stories on Insider’s business page.
The hottest pandemic purchase is a house.
One report found that 11% of Americans have moved since the start of the coronavirus crisis. Unmoored by remote work and driven by the desire to be near family or enjoy a lower cost of living, buyers have been snapping up primary residences and second homes, fleeing the coastal cities and flooding states such as Texas and Florida, as well as smaller cities, spacious suburbs, and vacation-home spots.
The mass relocations and purchases – coupled with the reluctance of existing homeowners to find a new place to live during a pandemic – have driven the number of homes for sale down to record lows, which in turn has propelled home prices to their highest rates in 15 years.
Add that up and it’s harder than ever to break into the real-estate market.
Here are five things to understand in order to decide whether you’re ready to take the plunge into homeownership.
1. There’s a striking imbalance of supply and demand
Competition to buy a home is fierce.
There are more people who want to purchase properties than there are homes on the market. (There are even more real-estate agents in the US than there are homes for sale.)
The tightening housing market is goading prospective buyers into expensive homes that don’t ultimately fit their wants or needs. But for those with cash to spare who are prepared to compromise, now could be a decent time to scoop up a property.
2. Buying a house is expensive even though mortgage rates are still low
Low mortgage rates and the desire for comfortable work-from-home digs have fueled a home-buying frenzy.
The spike in real-estate activity has absolutely depleted housing inventory and ratcheted up housing prices, meaning you could ultimately be overpaying for a property you’d be settling for anyway.
Mortgage rates are still at historic lows, but the high home prices can cancel out the opportunity to get more house for your money and keep monthly payments affordable.
3. Building a new home may not be much of an alternative
While existing listings dwindle – in part because homeowners are reluctant to resell their homes out of fear that they may not be able to afford their next one – a possible solution is to buy land and build a new house.
But the raw materials necessary to construct a new property have gotten exorbitantly expensive amid the pandemic. Logistics and shipping issues have resulted in long waits for certain supplies.
There’s also a finite number of contractors and workers to erect such homes. Those workers are in demand, meaning labor costs are also high. Builders nationwide are facing severe delays to complete new builds or even finish renovation projects on fixer-uppers.
The added costs and delays slow down builders, lead to even more expensive home prices, and act as a deterrent to hopeful buyers.
4. Many popular places to live have become even more unaffordable
The pandemic emboldened many Americans – particularly employees who could work remotely – to ditch their big-city apartments and try out the suburbs, rural areas, or different states.
Buying a home in these newly popular areas may result in even more competition. Think higher prices and fewer houses to choose from.
5. Do thorough research before making any offers
Over the past year, some have snatched up houses only to be met with buyer’s remorse, while others have happily profited from their real-estate investments.