Exclusive coverage of economic and financial reports
Housing Affordability Erodes After the Pandemic
May 12, 2022
Home prices have been increasing consistently since the global financial crisis in 2008-2009. The number of homes sold on the lower end of the price spectrum has declined steadily since 2010 as the median home price increased. Low mortgage rates and a strong labor market supported homebuying in the 10 years that followed. Just before the pandemic began, the percentage of homes that were sold for less than $299,999 was 40%.
During the pandemic, rates dropped to zero, making mortgages even cheaper. Additionally, individuals received stimulus payments in 2020 and 2021 that they couldn’t spend due to COVID-19 restrictions, creating a savings glut. The extra money was used by many to move away from cities towards the suburbs. These trends boosted demand and forced an acceleration in home prices. In the two years following the onset of the pandemic, the percentage of homes that were sold for less than $299,999 was just 16%, a -24 ppt decline in that time period.
A hawkish Fed is about to make housing a lot less affordable as mortgage rates rise while cheap homes become even harder to find. The low supply of homes is unlikely to allow this trend to reverse with home prices still expected to grow this year, though at a slower pace than the blistering pace seen last year.
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
- Long Term Employment Shifts Caused by the Pandemic
- Earnings Provide Positive Surprise Despite Pandemic
- Renewable Energy Under Fire in Texas
- Yellen Aims for Full Employment
- Minimum Wage Research in the Spotlight as a Hike Looks Inevitable
- Non-Residential Construction Soft in the Pandemic Economy
- Views on Interest Rates and the Move in Treasury Yields
- Inflation Indicators Healthy but Still on the Rise
- Risky Assets Sell-off Despite Optimistic Economic Outlook
- The Latest on Vaccinations and What it Means for Growth
- Highlights of the Fed's "Economic Well-Being of U.S. Households in 2020" Report
- Relative Factors and Forward Change in Federal Funds Rate
- Can Wage Growth Keep Up With Inflation?
- With That, We Carry On
- Supply Pressures Looking to Peak
- Cars are Still Expensive, Workers are Still Needed
- Recovery Continues, but Delta Looms
- Fed Eyes Tapering While China Sees a Setback
- Review the Fed Previews
- No Tapering Yet
- Labor Day on Labor Day
- Delayed or Disappearing Growth?
- Supply and Demand Mismatch will be Evident during the Holiday Shopping Season
- Workers Find Leverage in a Tight Labor Market
- Cautiously Optimistic
- Sour Expectations Take Down the Market
- Q3 Earnings Were Surprisingly Good
- Inflation Weights on Bonds and Consumer Sentiment
- FOMC Tapers While Trade and Employment Flash Mixed Signals
- Inflation is Getting Broader, Not Cooler
- Unemployment Insurance During the Pandemic
- A Year of Normalization
- What Will GDP Growth Look Like in 2022?