Six months after hitting shores in NYC and LA, COVID is still the name of the game in the national housing market, causing soaring demand on limited inventory as people look to face a new reality of remote work, homeschool, and the potential of another lockdown- albeit in bigger quarters.

Per Realtor.com, listing price growth is the strongest in three years, and the national median cost of a home has increased by 10% since 2019. As many states came out of lockdown at the beginning of the summer, people in major metros began looking for more space after being stuck in the house for months. Nearly 500K fewer homes are on the market in 2020 as compared to one year ago, a ~38% decline. As prices increase, it may behoove watchers to keep an eye out for the bubble. Homes are in demand because of coronavirus-fueled desperation, but assuming normalcy returns sooner rather than later, it remains to be seen the true worth of homes that have been inflated in value, which could cause massive problems for the market down the road.

One of the largest trends of the pandemic has been the outflux of city-dwellers into suburbs, causing much of the activity seen over the last few months. Much has been made about this trend in cities like NYC, which was exposed to a prolonged shutdown and saw the highest infection rate in the nation at the start of the pandemic. While it would be easy and understandable if investors wanted to hightail it out of the urban market, opportunities may be available in the coming months to purchase previously outpriced homes. Forbes predicts that “out-migration will make city living more affordable… In time, these reductions in the cost of urban living and doing business will draw both new residents and new businesses.” In short: Forbes is predicting that the end of city living is not nigh, and encourages investors to play the long game.

For those looking to get into the investor market, it may be best to wait out the current demand until the early months of 2021. Currently, the CDC has issued executive guidance that, effective until Jan. 1, 2021, individuals cannot be evicted for failure to pay either rent or mortgage payments, citing fear of furthering the public health crisis if people have to “double-up” in homes and potentially spread contagion. Landlords lost ~$9B in rental income in the last quarter, according to The Real Deal. On the ownership side, the Mortgage Bankers Association stipulates that delinquencies in 1-4 family residences is up 386 basis points since Jan. 2020, and 369 basis points from 2019; in other words, the number of people behind has increased, and quickly. Additional federal stimulus looks unlikely as Congress heads into the fall of an election year, and economies are faced with the uncertainty of continued closures with federal officials urging citizens to buckle up for a potentially disastrous winter with COVID. As such, these poor numbers will likely increase over the coming months; however, moratoriums cannot last forever, and the Federal Reserve is looking to make the most out of activity once they do expire. Chairman Jerome Powell has indicated that the Fed’s interest rates will remain at zero until at least 2023, allowing buyers to continue to take advantage of the record-low mortgage rates for quite some time.

In non-COVID news, there is an interesting take from the University of Arizona professor Arthur Nelson in the Journal of Comparative Urban Law and Policy has an interesting take on millennial housing in the coming years. Given that the millennial generation is so much smaller than Gen X/Gen Y/Baby Boomers, there will be, in the next 10-20 years, a huge deluge of inventory in the market as older generations look to sell. Millennials and Gen Z statistically desire closer proximity to the major metropolis (think, exurb, not suburb), smaller land plots, and walkable communities in comparison to suburb-heavy generations prior. The “Great Senior Short Sale,” as it has been dubbed, is predicted due to a combination of factors: decreasing population in many suburban counties; smaller household sizes as millennials enter parenthood; and lower earnings for millennials relative to past generations, to name a few. While the short-term trend may indicate movement out of exurbs and cities into traditional suburbs as a consequence of the pandemic, this is an acute situation in a long-term trend. As life resumes normalcy with the inevitable development of a vaccine, millennials will likely remain more closely tethered to the cities and exurbs.