Basically I understand that there are not many houses for sale right now, so supply and demand would dictate high prices. However, wouldn’t the high prices attract more people to sell? Is everyone just holding their houses hoping prices go even higher?
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The last big crash was largely due to banks handing out adjustable rate mortgages like they were candy. They didn’t do proper background and credit checks. When the rates adjusted up a large percentage of borrowers couldn’t make payments.
Next, this spiraled because the stock market was full of what we’re basically bundles of mortgages, a historically safe investment. These mortgages were bundled in such a way that single digit percentages of them defaulting caused a massive crash. Now the markets gone to hell, people are losing their jobs and investments, further defaults on mortgages. And we had a crash.
Today prices are high because with COVID we had millions of people stuck at home, the nearby amenities were all closed, restaurants, bars, etc. So a huge number of people were looking to move. Interest rates were at historic lows and it was a great time to take out a new mortgage. So we have two big factors contributing to the high demand for homes.
With mortgage rates going back up and restrictions lifting we should see a slowing.
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