A slew of recent data shows that in the U.S, the housing market is booming. The affluent appear to be fully recovered yet the low-income earners are still struggling. Could it be an indication of an economic recovery from havoc caused by COVID-19 pandemic?
No, it is not!
Michael R. Strain, the John G. Searle Scholar and the director of economic policy studies at the American Enterprise Institute (AEI) share his expert insights regarding the future of the housing market.
Strain, in his opinion piece published on Bloomberg, warns that 2020’s boom in the housing market could pave the way to a rising tide of foreclosure that will submerge millions of homes by 2021.
He observed that while existing homes increased by 9.4% in September to 6.6 million units on an annual basis – the highest level in more than 14 years – and the median existing-home price was 14.8% higher in September versus one year earlier, this demand has been fueled by limited supply and historically low mortgage rates.
“The housing sector is relatively sensitive to interest rates, and mortgage costs — already low before the pandemic began — are at rock bottom, driven to current lows by the Federal Reserve’s rate cuts and asset purchases,
