The Economic Perspective: “Explaining Rising Housing Prices”

Mary:  I’m Mary Walden, with economist MW, welcoming you to the economic perspective.  Today’s program tries to explain rising housing prices. Mike, despite the pandemic and continuing high unemployment, housing prices are still rising.  I have a simple question – why?

 

Mike: Summary Answer

  • In contrast to the last recession, when home prices fell
  • Three big reasons
  • Fed has pushed down interest rates – historic low rates for mortgages
  • So if still have job and want a home, financing is a big plus
  • Second reason – federal government has pushed trillions into the economy to support it during the pandemic – means there’s been a backstop to incomes – some have seen their incomes rise – and this has helped homebuying
  • Third – with so many people working from home (40% of the workforce), people are re-evaluating their home space, and many decide it’s time to upgrade with a different home
  • I’m MW

 

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.