Surprise: Home Prices Have Risen During the Pandemic
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What is the main topic discussed in this episode?
briefing for Friday, May 8th. I'm J.R. Whelan for The Wall Street Journal. Here's a statistic you would not expect to hear in the middle of a pandemic.
Why did median U.S. home prices rise 8% in March despite the pandemic?
Home prices are rising. They're up 8% in March, and a lot of it has to do with potential home sellers, well, staying home.
That probably explains some of the caution that people are feeling in listing their homes. You know, they might just be taking a wait-and-see mentality of, let's, you know, this is too uncertain a time to be listing our homes.
That's Wall Street Journal reporter Harriet Tory. Coming up, she'll tell us where in the U.S. home prices are rising and what impact mortgage forbearance is likely to have on the housing market.
Homebuyers looking for bargains during the pandemic may have to look a little harder. In March, the median home price in the U.S. rose 8% from a year earlier to about $280,000. Wall Street Journal economics reporter Harriet Torrey joins us to explain why.
How does low housing supply explain rising prices during COVID-19?
So Harriet, you'd think the spread of the virus would hold home prices in check because people are putting aside the idea of moving. So what's pushing them higher?
This is essentially a supply problem. So although demand has clearly taken a hit because of the coronavirus pandemic and people are being hesitant to make a big purchase like a home purchase, home prices are holding up because supply is extremely low. Low inventory has been kind of a feature of this economic recovery. You know, not enough houses have been built and a lot of, you know, there's just low supply on the market and that has pushed up prices pretty steadily. But another thing that's worth mentioning is that the data that we have so far only runs through March and home sales tend to have a bit of, you know, like a one or a two month lag. So the existing home sales that completed in March were probably started in sort of January, February.
So we might see changes in the months ahead because of everything that's going on with the coronavirus pandemic and the fact that this is just so unprecedented.
But home prices didn't rise during the last recession.
Yes, and it is also quite early to say whether... I mean, we are seeing rising home prices at the moment, but who knows if that will actually continue. And there are definitely some economists who think that home prices will fall somewhat.
Could data timing and reporting lags mask future home price changes?
What it comes down to essentially is that, A, there isn't a great supply of homes on the market, and B... People are now hesitant to list their homes. You know, the spring is usually the, you know, the key time for the housing market. 40% of home sales take place in the spring. This is the time when, you know, people are usually holding open houses and having lots of people traipsing through their properties regularly. interested buyers and so on. But, you know, people just aren't doing that because of coronavirus and fears of infection and so on. So some realtors are doing, you know, video tours and things like that. But really, this is this is just a huge and unprecedented hit to the housing sector.
I guess home sellers are hoping the economy will snap back like many people are.
Yeah. And so that's probably explained some of the caution that people are feeling in listing their homes. They might just be taking a wait and see mentality of let's, this is too uncertain a time to be listing our homes. So let's just wait a few months and see if things improve. Because nobody knows, perhaps it'll be in three months time, everything will be back to normal and social distancing will be over and people will be out and about and spending and so on. But it could also be that the coronavirus pandemic lasts longer than anyone knows.
Why are sellers hesitant to list homes in the spring of 2020?
So This is the big unknown question and a result of that is that people are kind of cautious about putting their homes on the market and then of course some people are also shying from buying a new house because you've seen the unemployment that like 33 million people have lost their jobs since the start of the pandemic and that's definitely a big you know a big reason to hold off from a huge purchase like buying a new home.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:06–0:14
2
Why did median U.S. home prices rise 8% in March despite the pandemic?
0:14–1:07
3
How does low housing supply explain rising prices during COVID-19?
1:07–2:21
4
Could data timing and reporting lags mask future home price changes?
2:21–3:33
5
Why are sellers hesitant to list homes in the spring of 2020?
3:33–5:05
6
Where in the U.S. saw the strongest price gains in March 2020?
5:05–5:30
7
How might mortgage forbearance and potential foreclosures affect the housing market?
5:30–5:38
Speakers
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