“There are now more real estate agents than homes for sale.”
No other quote describes the first 6 months of 2021 better than that one. Across the country, the Millennial and Gen Xer homeownership rate climbed from 40% to 48% in just three years. The baby boomers are not aging in place anymore. They want home offices, one-floor living, flex spaces, and larger windows for more light. Couple that with the trend to move out of downtown areas with a bit more space or to states with better tax advantages along with historically low-interest rates and here we are.
The obvious two-edged sword is what’s good for sellers is not so good for buyers. To top it off, the pressure to build new construction has created shortages in the material supply chain and skyrocketing lumber prices.
Peter Mallouk, JD. MBA. and President of Creative Planning had this to say:
“So, I don’t think it’s a bubble. I think the reality is that every time we get a new generation since the Baby Boomers, we get this narrative that this new generation isn’t going to live in houses and they’re just going to live in the cities and they’re not going to have families and all this stuff, and it’s just always wrong, always wrong. And I don’t know how this narrative gets going and gained steam and the media feeds it. And it is true that young people have kids later now. And I do believe that 30 is the new 21 in many different ways, but the reality is people eventually want a little bit of space and a lot of people get married and have kids and want to move out of the city. And so, we had this very big pent-up demand for millennials and soon Generation X will be needing housing.”
Below are the comparable statistics, 2nd quarter 2020 to 2nd quarter 2021 homes sold over 1million in the Twin Cities and South East Florida Markets. While the dollar increases are staggering (+335% SE Florida and +160% Twin Cities) keep in mind that during this same period last year, the country was in the midst of the pandemic lockdown.
As a side note: Moving into the third quarter there is some anecdotal evidence that we may be seeing a leveling off of demand and pricing but it still remains a seller’s market.
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