Do you ever sit back and imagine what life would be like if the COVID-19 outbreak never occurred? The reality is that the pandemic has had a profound impact on many people's lives -- both for better and for worse.
Just look at the economic situation we're in today. Inflation is roaring, largely because lawmakers had to pump stimulus funds into the economy at a time when supply chains were heavily disrupted, leading to a major disconnect between supply and demand. Now, countless people are struggling to keep up with everyday living costs, and many are putting retirement plans on hold due to financial concerns.
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Of course, the pandemic brought about some positive changes, too. These days, remote work is more ubiquitous after companies were forced to give it a two-year try, which has helped many people attain better work-life balance. Also, while some people's finances took a hit in the wake of the outbreak, others took the opportunity to shore up their financial situation when spending opportunities waned during periods of lockdown.
The COVID-19 pandemic has also had a major impact on the U.S. housing market. In fact, had the outbreak never happened, I think we'd be in a very different situation than what we're in today.
Home prices wouldn't be sky-high
The pandemic caused many people a world of emotional and financial upheaval. In light of that, sellers have been hesitant to list their homes since the health crisis began. That lack of inventory has helped drive home prices up to record levels, creating a situation where first-time buyers, seasoned buyers, and real estate investors alike are all struggling to purchase property.
Furthermore, borrowing rates dropped to a record low in 2020 due to the economic situation the pandemic created. That only fueled buyer demand at a time when listings remained stagnant.
Had the pandemic not happened, I think housing inventory would've held steady for the past two years, and I think home prices would've seen far more modest gains (like the usual 3% to 4% gains we'd see in an average market). The result? Today's housing market wouldn't be so darn impossible to crack.
When will the housing market cool off?
A big reason why home prices remain elevated -- even in the wake of rising mortgage rates -- is that inventory has not picked up in a notable way, even with so many people learning to coexist with COVID-19. At this point, it's hard to say when more housing inventory will hit. But until we see a healthier supply of homes on the market, property values are likely to remain quite elevated.
In fact, it's pretty fair to say that based on current housing market conditions, 2022 is not going to end up being a great year to buy a home. Anyone who buys in the near term is apt to land in a bidding war and pay a premium. And that's a situation worth avoiding for a lot of people.
The game of "what if?"
The pandemic may have created a tough housing market and forced countless buyers to put their homeownership plans on hold. But it also helped a lot of people grow closer to family and reassess their priorities. And so at this point, rather than bemoan the events of the past two years, our best bet is probably to do our best to learn from then and work on moving forward. For homebuyers, that could mean socking away extra money to put themselves in a strong position for when the market cools down.
