Over the past two years, homebuyers have discovered a housing market redefined by inflated prices, cutthroat competition, and virtual house hunting. Throughout 2020, 63 percent of North American home buyers made at least one offer on a home that they had never stepped into, The New York Times reports.
Covid-era real estate is also seeing a surge of more millennials in the housing market, a demographic trend further driving up competition as a nationwide supply shortage limits options for all prospective buyers. As prices show no sign of dropping and new market competitors refuse to back down, some buyers and housing experts worry that America’s real estate market may never return to its pre-pandemic order of business.
It was also that the whole mind-set required to buy a house, the most important purchase that most Americans will ever make, had undergone a fundamental transformation — possibly a long-term one, given the realities of both supply and demand. Freddie Mac estimated at the end of 2020 that the United States was 3.8 million housing units short of meeting the nation’s needs. Combine that with the surge of millennials into the housing market — they represented more than half of all mortgage originations last year — as well as the insatiable appetite of investors, who now snatch up nearly one in six homes sold in America, and the contours of a new, lightning-fast, permanently desperate housing market come clearly into view.
Several Austin real estate agents told me the same story about when the “flip switched” during Covid: a sale on Ephraim Road, in the suburb of Brushy Creek, on New Year’s Day 2021. The house was “well cared for,” a buyer’s agent told me, but “nothing out of the ordinary”: two stories in brick, with a large arched window — the sort of place one of Tony’s underlings might own in a Texas spinoff of “The Sopranos.” It was listed on Dec. 30, 2020, for $370,000, and it seemed like mere minutes until buyers and agents began lining up in the bitter rain to tour the house one by one, a process that took hours. Agents texted Google Maps screenshots to one another, noting the red traffic jams around the property. By the 11 a.m. deadline on New Year’s Day, the house had received 96 offers, with the winning bid clocking in at $541,000 — a mind-boggling 46 percent above asking.