If demographics are economics, and we accept that in the years 2020 to 2024 the U.S. will have the best housing demographics in history, then it follows that home prices could take off in an unhealthy way. In 2021, we already have the unhealthiest housing market — in terms of low housing market supply and multiple bids for each sale — than we have had in the last 10 years.

Adding to the built-in demand from excellent housing demographics, our recent history also contributes to the hot market. One of the COVID-19 pandemic’s economic realities is that U.S. bond yields and mortgage rates have been sent lower than what would have occurred in an expansion or a traditional recession. 

Additionally, the COVID-19 pandemic disrupted the natural housing market supply, keeping inventory lower than it usually would be. Low inventory, low mortgage rates, and built-in demand — what do you think would happen with home prices given this perfect storm?

The only proven pressure release valve we have at our disposal to calm this price-growth storm is higher mortgage rates. Only higher mortgage rates have the recent historical precedent for cooling the market and creating more days on the market, thus boosting inventory.