The housing market has been extremely competitive since 2020, driven by pandemic-era migration from urban centers to suburbs, smaller towns, and rural areas. Historically low interest rates initially pushed demand, while a severe shortage of housing inventory caused rapid price increases. Even as interest rates rose, limited supply kept prices climbing and affordability declining. Modest homes often sell for well above asking price and enter contract within days, shrinking options for buyers. Rental availability is limited, and rising interest rates reduce the appeal of waiting. Estimates place the housing deficit between 4.5 and 7 million units, intensifying affordability challenges.
Modest homes (like 1500 square feet or less) sell for $100,000 over asking price, and properties go into contract within days of getting listed. Our budget, which seemed very comfortable when we first made this plan, suddenly feels inadequate, and I'm dreading the possibility that we will end up buying too little house for too much money. Rental options are limited and interest rates are going up, so waiting doesn't feel like a good option either.
The housing market has been "bonkers," to use your term, since the pandemic began in 2020. Even before we had official numbers, there was anecdotal evidence Americans were picking up and moving out of urban areas to the suburbs, smaller towns, and rural areas. Historically low interest rates combined with an extreme housing shortage meant prices rose precipitously. And because of the housing shortage, even as interest rates rose, prices climbed even higher.
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