The housing market in 2020 has a considerable downside that highly affected the demand for this kind of market, wherein it affected many buyers greatly. Before the beginning of the pandemic, the housing market was thriving: there was a massive demand for housing properties in this market. But once the COVID-19 became a global disaster, the housing market was severely affected by it. This has affected other markets alongside it as well.
Housing Market's Huge Downside in 2020: The Rapid Home-Price Growth
According to Housing Wire, in order to combat the possible spreading of the disease, many governments around the world have implemented strict quarantine protocols in its major cities and communities. This was done during the first few months of the quarantine lockdown period. It resulted in most commercial and non-essential businesses to be closed down by the government. Then, they have advised the public to shut themselves inside their homes to avoid getting infected.
However, after a few months and slowly allowing the economy to open back up again, the housing market started to recover. This was backed up by having growth levels similar to pre-COVID-19 levels within the housing market.
Still, there is a new problem that the housing market needs to face during this time around. That problem is the sudden price growth of most housing properties.
Rapid Price Increase Problem and Why It Won't Drop Down
There is a reason why there is a sudden price growth and why it doesn't drop down instead. According to Vox, it is due to the sudden drop in both supply and demand in the housing market. Due to that, along with the pandemic's negative effects, the prices of most housing properties increased.
The only way for the prices to drop down again to fairly normal prices similar to pre-COVID-19 prices is when both the supply and demand is back up to normal again. Sadly, that isn't the case since there are too many buyers against little supply. Sellers aren't able to match up to the huge demand of buyers. Therefore the prices kept rising up instead of going down.
The Pricing Problem Will Continue To Persist
According to Forbes, the pricing problem within the housing market will continue to persist. Due to the high demand for new mortgages, thanks to low-interest rates. This will result in housing property shortages throughout the market, making the prices keep on rising up.
Unitl the shortage of available housing properties for sale in the market is dealt with, expect the prices continue to skyrocket in the following days up to 2021.
Aside from prices, another problem can arise from the housing market in 2020: the affordability of housing properties. This is an ongoing problem, as the housing market's pricing index has significantly increased to a record-time high. Therefore, this results in making first-time buyers of housing properties difficult for them in the end.
If both problems are not immediately addressed at the end of this year, it will be even harder for the housing market in the upcoming year of 2021.
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