Home sales continue to soar nationally, according to a new study, up some 17% in early April over where the numbers stood three years ago.
According to a market study issued by the Washington-based American Enterprise Institute, those prices are particularly being bolstered by an unprecedented tight supply as well as the “work from home revolution.”
That revolution, since the onset of Covid-19, has witnessed an increasing number of would-be homebuyers regarding a residence as not just as a place to live, but also to set up offices and workplaces.
Current Federal Reserve Bank interest rate policies and some $18 trillion in both stock market and home price appreciation gains, says the study, are “making homes increasingly unaffordable for potential low-income homebuyers,” at the very same time that “general inflation is driving up the cost of food, energy, and other necessities.”
The study, in fact, notes that the increasing house price appreciation is “evidence of an unhealthy market condition,” and one that may eventually be corrected by an increase in interest rates.
As it now stands, lower income homeowners are facing “increasing stress as general inflation, especially gasoline inflation, eats into budgets.”
But in situations where owners have more debt than equity in their homes, they may increasingly find themselves in a position where they have to sell their houses. “Ultimately,” says the study, “we would then expect a softening of home prices, especially in areas with high concentrations of highly leveraged Federal Housing Administration loans.”
By Garry Boulard
