The real estate prices in newly built communities exceed the price development from 2019. According to information from Zonda56% of the new shared apartments increased prices in July, while only 39% of the new shared apartments increased the prices in July 2019. Phoenix, Denver, Las Vegas, Sacramento, and Riverside are epicentres for new home construction and increased prices.
“The price increases, particularly in the new home market, are due to the mystery the industry faced before the pandemic, namely that there are no houses for sale. That only got worse during the pandemic. " Ali Wolf, Chief economist at Zonda, tells GlobeSt.com. "If a buyer wants to take advantage of prices today, there are very few options, especially if they choose location."
The pandemic has actually helped boost home sales. It has given many people the flexibility to move further away from their jobs, but the pandemic has also helped many people save up for a down payment, especially in more affordable markets. "When people decide whether to rent or own, they generally just look at the monthly payment," says Wolf. “In many cases the monthly payment comes close when you compare the rent with your own. What is unique today is that consumers have saved money. This is important because if you look at the rent-versus-own equation and find that the costs are roughly the same, you still have to come up with closing costs and a down payment. Those are the two things that have stopped people from buying houses. However, the pandemic has changed where we can spend our money and many people have saved more money than ever before in their lives. That has allowed people to put money into a down payment, and the low mortgage rates keep the monthly payment at a reasonable level too. "
Many of these markets have already seen immigration and the pandemic has accelerated the trend. “Las Vegas and Phoenix have always seen positive immigration from California. This worsened during the pandemic for several reasons, ”says Wolf. "First, people who want to move don't want to get on a plane today. If you're in California, these places are a five to six hour drive away. California buyers also have plenty of equity in their homes to move in more." These markets. People who can work from anywhere can now get a four or five bedroom. It's a big step, largely related to space. "
Price cuts in major markets like California won't necessarily reverse the trend. "If prices flatten, supply rises, and rates stay low, people may be less likely to leave because the market momentum looks better for them," says Wolf. “If house prices drop sharply it creates a number of new problems, not only for migrants, but also because it could mean people start losing equity in their homes and consumer confidence could dissolve. This really is the worst case scenario. At this point we wonder what this means for the economy. "