The emergence of the huge Millennial generation in the 1980s made strong housing demand in the early 2020s entirely predictable. T he 2021 housing craze feels as sudden and shocking as the pandemic, but it was decades in the making. Plus, some builders are putting their projects on hold because of the sudden tripling of lumber prices, which could delay the construction boom this country so badly needs. Seniors, who in previous decades sold their homes to downsize, are now more likely to “age in place,” which is keeping millions of homes off the market. Years of insufficient building and a construction pause during the pandemic have led to low inventory. When people leave multimillion-dollar houses in, say, Los Angeles to plunk down $1 million on a house that was worth $500,000 a year ago, they turn a merely frenzied housing market into a once-in-history, hair-on-fire, what-the-hell-is-happening bonanza.

“Just shy of half the buyers are coming from out of state” in the hottest markets of Idaho, Texas, and Florida. “We’ve never seen migration like this,” executives at Toll Brothers, the real-estate company, recently said on an earnings call. migration, and many families-especially many high-income families with work-from-wherever jobs-are shopping around for sunny, spacious real estate and bidding up prices wherever they land. More generally, the pandemic turned the kaleidoscope of U.S. On top of all that, interest rates, having basically declined for most of the past 40 years, recently touched new lows, luring more buyers into the market and encouraging higher bids. To make things even wilder, homebuyers are flush with cash after a year in which the national savings rate soared to its highest level in decades. Some might feel a desperate need to escape their current apartment, basement, or home after the coronavirus pandemic closed much of the world for more than a year and led to an outbreak of mind-numbing cabin fever. Having been too financially constrained to buy houses at a normal rate in the previous decade, many of them are now storming into the housing market. Millennials are the largest generation in American history. On the demand side, demographics are the big, invisible engine driving the machine. The longer answer is also supply and demand.

So what exactly is happening? The short answer is: supply and demand. It’s a perfect storm.”ĭerek Thompson: ‘This is unprecedented’: Why America’s housing market has never been weirder “But I’ve never seen anything quite like this. “In my time studying housing markets, I’ve seen bubbles and I’ve seen busts,” says Bill McBride, an economics writer who famously predicted the 2007 housing crash. With prices headed to the moon and listings blinking in and out of existence like quantum particles, nobody seems to know exactly when this is going to stop. Percentage of homes selling above asking price: record high. Pick a housing statistic at random, and it’s probably setting an all-time record. So wild, a Bethesda, Maryland, resident recently included in her written offer “a pledge to name her first-born child after the seller,” according to the CEO of the realty site Redfin. So wild, one poll found that most buyers admitted to bidding on homes they’d never seen in person. housing market right now? So wild, half of the houses listed nationwide in April went pending in less than a week.

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