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‘Shark Tank’ panelist says too many Americans are ‘priced out’ of housing market

Has it become too difficult for the average U.S. homebuyer to find and afford a property?

As we reach the final stretch of 2021, we now have roughly 18 months of data and experience on how the coronavirus pandemic has changed housing markets across the country.

The biggest takeaway is that home prices have accelerated during the pandemic timeframe. In June and July of this year alone, home prices jumped by 18.7% and 19.7%, respectively, according to the S&P CoreLogic Case-Shiller index of property values. July marked the 14th straight month with a rising rate of price increases, and the 19.7% that month was the biggest jump posted in the U.S. in 30 years, according to Bloomberg.

The surge in U.S. home prices has been driven by a combination of limited supply and voracious demand, which has been unchained from the traditional concerns of geography, thanks to the rise of the remote worker. Consequently, many smaller housing markets have become overvalued by outsiders who have swooped in, whether it’s to relocate or invest in a vacation property at a time when mortgage rates are historically low.

But there also has been an anticipated demographic shift among the Millennial generation seeking to become first-time homeowners. With existing supply already limited, and new housing construction dampened by the rising material costs, it has been difficult for many young people on more modest budgets to afford a home. They’re left to decide whether a climate of competitive bidding is worth it to them, or whether they should defer their search until a forecasted “cooldown” has really taken effect.

During a recent interview on Bloomberg TV’s “Surveillance,” a respected real estate veteran and celebrity investor remarked that the current state of affairs has become too prohibitive for most Americans.

Barbara Corcoran, the “Shark Tank” panelist and executive producer of the ABC series, believes the pandemic housing market has made for a lopsided playing field.

“Most people are priced out of the market,” Corcoran said. “It just seems unfair to feel like you have to be a pro investor bidding up the prices.”

Corcoran launched one of the nation’s most successful residential real estate brokerages in 1973, enjoying decades of success before selling the Corcoran Group in 2001. She said she’s never seen anything like the “insanity” of today’s market.

“The market has been going absolutely bonkers with no end in sight,” Corcoran continued. “Everything is being sold in bidding wars. I’m just hoping that the prices cool down a bit because so many people are left out of the market.”

Corcoran does not anticipate a crash similar to the one that preceded the 2008 recession, citing a different set of factors driving today’s price acceleration.

“Today’s market is fueled by individual buyers who want a better place to live,” Corcoran said. “They bring their businesses home. They want to raise their kids. When we had that drop-off, it was fueled by investors, house flippers, poor mortgages from companies that shouldn’t have been lending money at the time. It was a false market with a false bottom that fell.”

For the time being, Corcoran sees a dilemma that continues to squeeze homebuyers under this new set of hyper-competitive conditions.

“People are so uncomfortable, and yet they keep paying the prices,” Corcoran said. “And there’s no end in sight.”

For many homebuyers, higher prices have seemed more palatable because of interest rates that sunk well below 3%. They’re currently hovering closer to 3% — still historically low — but some real estate experts are.

That may relieve some pressure while simultaneously making the value proposition less appealing for those who want to buy a home, particularly if prices don’t come back down in a proportional way. A growing inventory of new homes in the U.S. and signs that pandemic housing demand may already have peaked at least point to a less frenzied road ahead.

Corcoran’s expertise in this arena underscores the magnitude of what has transpired in the U.S. housing market during the pandemic. For all those who are priced out, there are still many who have been willing to pay the steep prices to lay down a welcome mat.

As always, it’s difficult to gauge what qualifies as hyperbole when “insanity” becomes a standard in response to market forces.

Photo by Kindel Media from Pexels

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