The demand for homes costing $500,000 or more is rising as white-collar workers bring their offices home and well-off families are buying more space to shelter in place.
Almost 25 percent of home buyers from April through June paid $500,000 or more for their new homes, compared with 14 percent during the preceding nine months.
Buyers’ median income was $110,800; before the pandemic, buyers in this housing price range earned a median of $94,400.
Prices are rising as well-heeled buyers seek to relocate away from urban centers where social distancing can be difficult. Also, office workers have been liberated from their downtown cubicles to work at home, allowing them to move to cheaper and more spacious digs farther from downtowns.
Demand also is pushing home prices higher generally, leaving more lower-income and first-time buyers behind. First-timers made up 31 percent of the market during the 12 months ending 30 June, compared to 33 percent the year before and the historical norm of 40 percent.
Also, record-low interest rates set by the U.S. Federal Reserve to support the economic recovery allows more people to qualify for larger mortgages.
The median U.S. home price has risen 26 percent during the pandemic, from about $269,365 to $339,400.
Home sales stagnated for several years, then low interest rates and rising employment pushed sales to a 13-year high in February. Sales then cratered in March, April, and May before surging to new highs over the summer.
The sudden demand during the pandemic and shutdown caught economists, realtors, and industry analysts by surprise.
U.S. home sales will total 5.4 million this year and 5.88 million in 2021, the National Association of Realtors has predicted, which would be the most homes sold in a year since 2006.
TREND FORECAST: The COVID War housing spike will soften this winter as economic growth falters and the great rush from big cities to COVID-Safer suburbs and ex-burbs declines. It should be noted that the trend of the rich getting richer while the middle class and the rest of society sinks lower… is a trend that will serve to ignite the “Off with Their Heads 2.0” movement we had forecast.
