Covid-19 changed affordability, supply and home preferences for the foreseeable future, an in-depth analysis by Bright MLS and George Mason University finds
NORTH BETHESDA, Md., Oct. 5, 2023 /PRNewswire/ — The Covid-19 pandemic did more than temporarily change how and where people live. Government actions over the past three years, along with more freedom for many to work remotely indefinitely, will impact housing affordability, the number of homes available for sale and people’s housing choices for years to come, according to two new reports released today by Bright MLS.
The research, which was conducted in partnership with George Mason University, examined home sales transactions within the Mid-Atlantic region between 2018 to 2023 to assess the long-term impact of the government’s COVID-19 response and remote work on the housing market.
“The pandemic upended the housing market, opening up new homeownership opportunities for many and prompting others to re-evaluate where they wanted to live and what they wanted in a home,” said Dr. Lisa Sturtevant, Bright MLS Chief Economist. “Our research shows the pandemic-era federal stimulus payments and monetary policy, along with remote work, allowed more people to become homeowners, especially individuals and families with traditional lower homeownership rates. However, those same policies had a major impact on affordability, supply and home preference that will shape the housing market for at least the next three to five years.”
Low rates and increased savings fueled demand, causing home prices across the U.S. to rise very quickly. In the Mid-Atlantic, home prices rose by more than 40% between 2020 and 2022, a faster pace of price growth than during the housing market bubble of 2005 – 2007. As a result, housing affordability is now at its lowest level on record with a household needing an income of more than $120,000 to buy the typical home in the region.
“Higher prices, along with mortgage rates that ultimately moved higher, are pricing many people out of the market, particularly first-time homebuyers. Delaying homeownership delays wealth creation. Although some benefited during the pandemic, those who missed the window are getting further behind,” Sturtevant said.
According to the report, the Fed’s actions, which first led mortgage rates to hit all-time lows and then sent them increasing at the fastest rate in history, created a new obstacle to supply – homeowners refraining from moving because they wanted to hold on to their existing super-low mortgage rates.
“Interest rate policy locked up both the demand and supply sides of the housing market. Inventory in the Mid-Atlantic region is less than half of what it was prior to the pandemic and monthly new listings are at a two-decade low,” Sturtevant said. “It is this low inventory that has kept home prices rising, even as the higher mortgage rates have slowed demand. The outlook is for low inventory to continue at least for the next one to three years.”
Demand for more space, and the willingness to move away from the urban core to get it during the pandemic, drove home prices up faster in suburban markets within the Mid-Atlantic region. The research found home price trends varied depending on the types of jobs in the metro area. Where work from home continues to be an option, the home price trends that emerged during the pandemic are likely to persist.
“With work from home still very common for some businesses and industries, housing preferences are very different today than they were for millions of Americans prior to the pandemic,” Sturtevant said. “With commuting no longer a factor, many may be comfortable exchanging proximity to an urban area for affordability and more space.”
Full reports are available at http://brightmls.com/PostPandemic
About Bright MLS
Bright MLS was founded in 2016 as a collaboration between 43 visionary associations and two of the nation’s most prominent MLSs to transform what an MLS is and what it does, so real estate pros and the people they serve can thrive today and into our data-driven future through an open, clear and competitive housing market for all. Bright is proud to be the source of truth for comprehensive real estate data in the Mid-Atlantic, with market intelligence currently covering six states (Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia) and the District of Columbia. Bright MLS’s innovative tool library—both created and curated—provides services and award-winning support to well over 100K real estate professionals, enabling their delivery on the promise of home to over half a million home buyers and sellers monthly. Learn more at BrightMLS.com.
SOURCE Bright MLS