– I keep hearing the housing market in the USA had such a price surge because of demand increase and a lack of housing. Why did happen all of a sudden? There wasn’t some huge increase in people too.

Question

Secondly- What would it take for prices to change?

In: Economics

Answer 1

I can only talk about where I live, but normally the state builds x amount of houses per year to accommodate growth. During COVID most new construction was stopped. On top of that we had a record year of people moving here from high cost of living areas, specifically California and Washington. Then when it started to rebound, new construction now had to get water permits, which are now more limited, and they had to prove that the current water supply there could sustain it. This caused the market to never recover. And honestly, it never will unless a nice chunk of people either move out or foreclose on their home. Or the plan to have a desalination plant built in Mexico, that runs up here for new water. In case you haven’t guessed yet, I live in Arizona.