Currently, homes around the country are going for tens of thousands of dollars over the asking price. Real estate agents see more all-cash offers than ever before, and the chances of buying at modest prices don’t seem to exist. Last year, previously owned U.S. homes surged to a 14-year high, and many economists predict that sales will break even this high record in 2021.
Such demand began during the first few months of the COVID-19 pandemic when people fled big cities and other urban areas for suburban and rural neighborhoods. And this boom shows no indications of slowing down.
The result has been fierce competition among buyers for a very limited number of homes. Also, fewer new homes are being built because of the pandemic, and older homeowners are reluctant to sell. This makes already high prices even higher. Even the time that sellable homes are on the market is shortened to just a few days. This indicates even more high prices than previously existed.
A similar situation unfolded in 2006, just a couple of years before the housing bubble burst, and the economy fell into a deep recession. But a few factors make this boom different.
The first is that banks aren’t handing out mortgages willy-nilly as they did in 2006. Today, banks are requiring much higher credit ratings. Down payments also are much more expensive. If this trend of conservatism is solid this time, it will likely prevent the crash that emerged in 2006. The alternative would present major losses among lenders as took place in that unfortunate historical year.
The second factor is demand. While the coronavirus pandemic may have triggered the previous housing boom/bust, the current demand is much more realistic, indicating that the housing boom will continue during a long-term period into the future.
Although no one can be sure regarding the future, the current housing shortage is for real. This is heavily emphasized by the current challenges confronting big cities such as New York, Chicago and Los Angeles. This is bound to accelerate demand in suburban areas, especially towns within driving distance of these big cities.
What is Driving the Pandemic Stock Market?
Since the stock market crash following the COVID-19 disaster in February 2020, the subsequent stock market boom it generated has puzzled all the bright analysts. Two major factors share much of the credit for the unexpected bull markets that seem to have no end as this is written.
From my viewpoint, the most important factor is the brilliant direction of the Federal Reserve from Chairman Jerome Powell. He has the guts to shift America’s banks from the interest-rate restraint it has always taken to generate American jobs and generate a recovery from a frightening economic doom, rivaling the U.S. 1929 disaster.
The results of that bravery not only stopped an imminent economic crash but also generated three years of equity markets. Despite short down intervals during this period, the fantastic investment involvement has seen stock market highs not seen before, even in good times.
Another factor has been the unexpected interests of America’s financial community jumping to invest in corporations, large and small, in ever-greater numbers. The long-time investment community has shown enthusiasm seldom seen, even at the best of times. Many newcomers have shown great interest in equity trading funds, which offer a basic mix of stocks in various categories.
What has been even more surprising is the rebound from negative economic factors along the way, such as those that would previously generate major sell-offs. Even the fear of missing out in the long-term upward growth of the stock markets in the future has done its share of maintaining and increasing stock market interest.
Is Global Climatology a Manufactured Farce?
While cleaning up the Earth’s atmosphere has been a major objective of liberals and conservatives alike for the past few years, no one has taken the trouble to explain how this will come about.
It has already accomplished the setback of the American manufacturing sector, which had its rebirth during the Trump administration. It was emphasized in reverse by President Joe Biden’s shutting down of the Keystone XL pipeline from Canada to the “parched” U.S. northwest.
This reversal of America’s oil production success, and coal production for home and exports, has achieved an unstoppable downturn. This is already felt in the economic fallback of the U.S. southwest oil states and West Virginia coal.
Another result is America’s No. 2 position in world gross domestic product, giving the No. 1 position to China. That dynamic nation is smart enough to make idle promises but moves forward aggressively in its economic development.
Not to be totally pessimistic about the near future, there is a good chance of GOP electoral victories in the upcoming mid-term election. Also, the COVID-19 vaccines, initiated under the superb production of America’s medical producers, are helping to stop the spread of the infectious disease.