Inside the pandemic housing boom: Low rates, high demand and no supply

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Several factors collided during the COVID鈥�19 pandemic to create one of the most dramatic housing booms in modern history. D.C.鈥慴ased associate real estate broker Marc Cashin of Corcoran McEnearney remembers that period vividly, describing it as both emotional and chaotic.

鈥淭he first three months, you couldn’t show a property at all. We didn’t know whether or not we’d be working again,鈥� he said. 鈥淎nd then after that, once rates came down, it led to probably one of the greatest real estate periods over the next two to three years.鈥�

Once mortgage rates plunged 鈥� hitting a historic low of 2.65% for a 30鈥憏ear fixed-rate mortgage in January 2021 鈥� the market shifted almost overnight. Cheap borrowing dramatically expanded what buyers could afford, and many felt an urgency to act before the opportunity disappeared.

鈥淭he mentality that was expressed to me by those buyer clients was, you know, money is so cheap to borrow right now, if I don’t do it now, I may never be able to buy a home again, right?鈥� Cashin said. 鈥淪o they saw those 2 to 3% interest rates, and they figured they needed to jump on it.鈥�

At the same time, the rapid transition to hybrid and remote work reshaped where people wanted 鈥� and were able 鈥� to live. With offices closed and commutes eliminated, families began reevaluating their priorities. Space, privacy and distance from crowded city centers were more desirable than ever.

鈥淭his is how the new world is going to be. I need all the space I can get, and I want to be as far away from people as possible,鈥� Cashin said, referring to the mind state of homebuyers. 鈥淭hat鈥檚 really what was driving that search 鈥� was land, space, a pool, a nice big living area for my family, and I kind of don’t want to be near my neighbors.鈥�

But even as demand surged, the logistics of buying and selling homes became more complicated. Strict safety protocols 鈥� masks, distancing and limits on in鈥憄erson interactions 鈥� forced real estate agents to adapt quickly.

鈥淲e learned how to show property over FaceTime,鈥� Cashin said. 鈥淲e actually had classes on that, which was funny, how to do a tour over your phone.鈥�

Meanwhile, the supply of available homes could not keep up. The U.S. was already facing a housing shortage before the pandemic, and builders struggled to ramp up construction amid labor shortages, supply鈥慶hain disruptions and soaring material costs. The imbalance between supply and demand created intense competition. Cashin recalled open houses where lines stretched around the block.

鈥淲e were seeing as many homes as we could, but a lot of times before we even walked in the door, it was under contract, because it had an insane amount of offers that went well above list.鈥�

Bidding wars became the norm, and the numbers were staggering. Cashin remembered a $3 million listing that attracted 60 offers and closed at over $4 million. But the frenzy of 2020 through 2022 was never sustainable, and Cashin said the market has since settled into a more typical rhythm. He described the D.C. metro area today as stable and resilient, supported by an educated workforce and higher paying jobs.

鈥淟ooking back on it, it does feel like it happened 20 years ago,鈥� he said, 鈥渁nd maybe that’s just because we all aged so quickly because of how crazy it was.鈥�

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