![]() ![]() In March 2020, the economy experienced a flash-freeze depression in the face of a normalcy-destroying virus. In 2017, 2018, and 2019, the Case-Shiller national home-price index set new all-time highs each year. The combination of constricted supply, skyrocketing demand, and bargain-basement rates set the stage for a surge in home prices. Meanwhile, mortgage rates fell below their 50-year low. College graduates plowed into downtown neighborhoods, leading to a sharp rise in living costs in America’s largest cities, and then pushed into the suburbs. The supply of homes all but stagnated just as the Millennial generation-the largest in American history-aged into its prime home-buying years. But several factors conspired to bring it back to life. The number of new homes under construction plummeted to a disturbing low as the 2010s became the worst decade on record for home building per capita. ![]() Home prices fell for six straight years from 2006 to 2012. real-estate market collapsed and dragged down financial markets. After years of undisciplined lending, the U.S. The full story of the 2022 housing market begins at least 15 years ago, in the flaming dumpster fire of the global financial crisis. The 21st century has been a tango between vertiginous swings in demand and corresponding swoons in construction, which has left us with a historically unusual shortage of available housing. But zoom out and a more accurate picture comes into focus. There was a pandemic, followed by inflation, followed by rising interest rates: That’s it the end. One could tell a simple story about the housing market to explain all of this madness. The average rent has soared to an all-time high, as demand surges in the absence of available units. If you want to find a new place to rent, good luck twice over. For many people, that point is immaterial, because they can’t even find a place to buy: The number of available homes is still about 40 percent lower than it was before the pandemic. Mortgage rates have increased faster than in almost any period on record, adding tens or hundreds of thousands of dollars to the typical cost of owning a home. If you want to buy or sell a house in 2022, I wish you good luck. This is Work in Progress, a newsletter by Derek Thompson about work, technology, and how to solve some of America’s biggest problems. ![]()
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