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One of the dominant economic stories since the start of the COVID-19 pandemic has been the fiercely competitive housing market. The median sale price of a home in the United States topped $400,000 for the first time in 2021 amid aggressive bids and bidding wars in markets across the country.
Today’s housing market challenges are the result of a powerful combination of supply and demand factors. The United States has underbuilt housing supply for years, with mortgage lender Freddie Mac estimating a shortage of 3.8 million housing units starting in 2020. The COVID-19 pandemic has caused difficulties additional, as supply chain constraints and labor shortages have increased costs and made it difficult. for builders to follow. On the demand side, millennials are in a peak period for home buying, and a string of years of low mortgage interest rates has drawn many buyers into the market. More recently, the COVID-19 pandemic has led to wage increases for many professions and a greater shift to remote working, which has increased demand for larger homes.
The result has been a hypercompetitive housing market that has produced a dramatic spike in home prices since the start of 2020. Prior to the onset of the pandemic, the median selling price of a home in the United States was $329,000. . In the third quarter of 2021, the median sale price peaked at $411,200, before declining slightly to $408,100 in the final months of 2021. With more than half of homes now selling above $400,000, fewer options are available for lower prices. income or first-time buyers, and current homeowners looking to upgrade to bigger or nicer homes must pay a higher price to do so.