The housing market has been hot since the start of the pandemic and home sales have remained high.
In this episode of The five, registered on 23 august, Fool contributors Jeremy Bowman, Brian Withers and Toby Bordelon explore the drivers behind rising home sales and discuss the future of the residential real estate market.
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Brian Withers: We’ll move on to the third news item, and home sales are on the rise again this month. It’s really interesting. There was a 12-month low in May, so things have been climbing over the past two months. But if you go back to October, the October 2020 summit was a significant high for, like, until 2008. So the places where things are, and maybe rather than just drawing the thing with my hands. , let me share the slide here.
So these are home sales over the past decade. So let’s make a small bar column. It seems easier. You can see this month was almost, I mean, 6 million home sales last month. Aside from those few months here, that number, you go back 25 years and it’s a peak going back to, say, 2007. So it’s a pretty high watering hole in terms of home sales in the world. United States. was sort of fascinating to me, so I wonder if this trend is going to continue. You have remote work in progress. The delta variant has potentially boosted sales for the coming month. So what the hell is going on with home sales, and do you think that will continue over the next year or so? Jeremy, why don’t you take this one first?
Jérémy Bowman: Well, yeah, I think the housing market has been pretty crazy since the start of the pandemic. And I think what we’re dealing with now is nobody really knows for sure what the post-pandemic situation will be like, when it comes to remote working and everything in between. I don’t know anyone who’s like, oh, yeah, I’m definitely going back to the office five days a week, and everyone I talk to is like, well, maybe after Labor Day, maybe it’ll be. -be part-time. The delta variant threw it all in the air. There is even more uncertainty than we previously thought.
So I think of all the trends that we saw during the pandemic with e-commerce and cloud computing, Zoom, and all of those things that have taken off and been successful, I think remote working is probably going to be the trickiest. A lot of people seem to like it. It obviously offers benefits for parents and others who may need to get out for a few minutes during the day or have other needs to accomplish. I think no one really misses the commute. So if you have the freedom to work anywhere you want, you are going to enjoy it.
And so I think the trend that COVID has started, with people leaving high-priced cities and looking for more space and reassessing or balancing what that quality of life looks like, is going to continue.
I think another point worth mentioning is that Airbnb (NASDAQ: ABNB) and these vacation rental or roommate sites have really taken off. Now your house is a monetizable asset in a way that it wasn’t before, and if you can work remotely, if you’re a single person, you can just rent your apartment or whatever for a month and go on a trip and do that sort of thing. It might not be directly related to the housing market, but I think it might change the way people perceive it, or, hey, I can buy this beach house and rent it out when I’m not around . I think it will also stimulate the housing market.
Toby Bordelon: Yes, I agree that the trend of working from home, I think, will continue. I think it’s going to be here to stay in one form or another. I’m not sure if this is going to have a huge impact on the housing market in the long run, however. I think we will eventually stabilize, as if we are going to see these sales stabilize. Or at least the rate of increase will slow down in terms of price increases.
Much of what we face – we’ve talked about this a lot before – are supply issues. Eventually, it rectifies itself. It will take a while. We are talking about housing. It’s not something you can say, let me build a few more computers and we’re good to go. [laughs] It takes time to build the house. And it takes a lot of skilled labor to build a house. This is another part of the equation. But eventually, we’ll get there.
I also see, however, stories of rent increases in places like New York, like a return to pre-pandemic levels and even above, indicating that all this tale of people fleeing cities might not be. whatever it is meant to be. Just as you think about two years ago, people were talking about the fact that millennials don’t want to own a home in the suburbs. Well it turned out they did. They just couldn’t afford it. [laughs] And it turns out that people like to live in cities to some extent.
I think back to when I lived in New York. I did not move to New York for a job. I decided to look for a job in New York because I wanted to live there. I wanted the career and wanted to do the job that was being done in New York City, but I made a conscious decision, that’s where I want to be. Let me look for a job there. No, oh, I have this great opportunity; I guess I have to move to New York. Just being able to work from home doesn’t negate the social and entertainment value of being in a particular place and the lifestyle of being in that place, and if that’s what you want, this is it. whatever you want, at least for a while.
So I could definitely see that even though law firms and accounting firms and all kinds of offices and people within offices in New York City say that you don’t have to come to the office all the time, people might say cool, but i still want to live here. How am I going to get there? And maybe that means you got a bigger place or something.
But I think just because we’re going to see a trend where we’re working from home doesn’t mean that there will suddenly be this perpetual increase in prices. Eventually that will take hold and people will be where they want to be, both to live and then to work as they want. You’re going to see a shuffle and an overhaul of things, but we’ll find a balance at some point.
Brian Withers owns shares of Zoom Video Communications. Jeremy Bowman owns shares in Airbnb and Zoom Video Communications. Toby Bordelon owns Airbnb shares and has the following options: short October 2021 $ 135 sale on Airbnb. The Motley Fool owns shares and recommends Airbnb and Zoom Video Communications. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.