The housing market may be leveling out as recent housing metrics slow. It's been reported all year that housing statistics are breaking records, then breaking those records, half of listings are scooped up in the first week, and buyers continue to bid on homes sight unseen. The extreme demand has squeezed a small supply, but housing inventory has increased for three consecutive weeks, says The Atlantic. Bill McBride of Calculated Risk, who predicted the housing bubble bust says at this rate active inventory will not reach normal levels for roughly 14 months, but it is a sign that the market has reached its peak.
On the demand side, demographics are the big, invisible engine driving the machine. Millennials are the largest generation in American history. Having been too financially constrained to buy houses at a normal rate in the previous decade, many of them are now storming into the housing market. Some might feel a desperate need to escape their current apartment, basement, or home after the coronavirus pandemic closed much of the world for more than a year and led to an outbreak of mind-numbing cabin fever. To make things even wilder, homebuyers are flush with cash after a year in which the national savings rate soared to its highest level in decades. On top of all that, interest rates, having basically declined for most of the past 40 years, recently touched new lows, luring more buyers into the market and encouraging higher bids.
More generally, the pandemic turned the kaleidoscope of U.S. migration, and many families—especially many high-income families with work-from-wherever jobs—are shopping around for sunny, spacious real estate and bidding up prices wherever they land. “We’ve never seen migration like this,” executives at Toll Brothers, the real-estate company, recently said on an earnings call. “Just shy of half the buyers are coming from out of state” in the hottest markets of Idaho, Texas, and Florida. When people leave multimillion-dollar houses in, say, Los Angeles to plunk down $1 million on a house that was worth $500,000 a year ago, they turn a merely frenzied housing market into a once-in-history, hair-on-fire, what-the-hell-is-happening bonanza.