The Phoebe Files | What’s Driving this Insane Real Estate Market

Great question Ellen.  These are probably the top questions my clients are asking me at the moment.  Along with “how high do I need to bid over asking price to get this darn house?!” 

There are several factors driving the frenzy and high prices seen in this market; all of which are common across the US.  

Here are four big ones: 

1. Interest Rates: Rates are at an ALL TIME LOW.  Quite literally, there has never been a better time to borrow money which is encouraging everyone and their Mother to want to buy a home.  With mortgage rates in the 2-3% range, borrowing money is a no-brainer.  Low rates expand the consumer buying population.  More Buyers = more competition.
2. Renters Want to Settle:  This ghastly pandemic has offered us a few silver linings, one of which is people have been reminded that home is where the heart is. As cliché as that sounds, when you’re bound to your home 24/7, you want to like it and Renters are eager to set down roots and create a home of their own that has more than 4 walls and a few windows. They want yards, room to expand, a home office space AND a gym for their Peloton.
3. WFH: Chances are you can name at least a dozen friends who are working from home.  These are people who never would’ve had that opportunity in the past. This shift has been a game changer for home buying.  Buying your own home is a smart move when you can borrow the money for almost nothing and work anywhere you want!
4. Rainy Day Fund: Turns out there’s only so much on-line shopping you can do.  People are also saving a fortune not eating out and cutting back on commuting expenses working from home (see above!).  They’re putting that money into savings and investing on things like a home. 

Fun Fact: even with low interest rates, we’re seeing more homes purchased in cash…which is a good thing.

These are just a few of the factors driving the market chaos. Wondering how long it will last? We’ll talk about that next week! Stay tuned.