– 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

Covid is what happened. A big kink in the supply chain raised prices across the board. Add in the work from home movement causing a lot of mobility in the housing market, which caused prices to rise.

The rising cost of building houses, along with supply issues, really slowed down the building of new houses. So demand greatly exceeded the supply.

It certainly doesn’t help that a lot of people only want to live in major metropolitan areas. This means competition for housing in those areas, which causes prices to go up.

Without the economy crashing right along with it, i don’t see prices really dropping too far. Especially in highly sought-after areas. They’s always some fluctuations, but i dint see prices take dropping too far short of an economic collapse.