“A lot of the people who are buying today … are among the most creditworthy in the history of mortgage lending,” said Reggie Edwards, an economist at Redfin. The 2010 Dodd-Frank Wall Street reform law imposed much stricter home loan requirements to avoid another foreclosure crisis, and banks have also been wary of lending to all but the safest buyers because of pandemic-related uncertainty. Though mortgage rates are low, lending standards have tightened considerably since the 2007-09 recession. Offers well above asking price are commonplace, and those unable to outbid competitors have upped the ante by waiving inspection requirements and restructuring offers with better immediate incentives for sellers.Įxperts say there’s no clear end in sight to the homebuying frenzy, but they don’t see the same red flags that preceded the collapse of the mid-2000s housing bubble. “You get into this year of record low levels of inventory, and that really is what’s spurring the very rapid home price growth,” he added.īuyers with savings or equity in their current homes have helped keep up the pressure. “We really sort of exacerbated this imbalance where demand was really strong but supply was unbelievably constrained,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. Home prices rose 12 percent year over year in February, the fastest rate since 1996, according to the most recent reading from the closely watched S&P CoreLogic Case-Shiller home price index.
Īnd last month was not a pandemic anomaly. The median home price in April rose 20 percent - to $347,500 - compared with a year ago, and the average home spent just 20 days on the market before selling, according to data released Friday to real estate listing website Redfin. home prices is forcing thousands of aspiring buyers into grueling, often risky bidding wars, raising questions about whether the torrid housing market could be in a bubble.įor nearly a year, the combination of low mortgage rates, a flood federal stimulus, lockdowns and teleworking - all sparked by the coronavirus pandemic - has fueled a rapid increase in demand for houses.Īt the same time, COVID-19 exacerbated an already severe housing shortfall by causing major delays in new home construction and kept some potential sellers on the sidelines because they were afraid to let strangers tour their homes during a pandemic.
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