In another sign of the real estate market overheating, you have more realtors in the market than you have homes available for sale. The number of realtors according to the National Association of Realtors (NAR) jumped to 1.448 million which was an increase of 5% from last year. However, at the end of February there were only 1.03 million homes available for sale. People are looking at million dollar crap shacks and are pulling out their trusty calculator and doing the math on a juicy 5% commission. Sell two crap shacks in a year and you are making more money than most of the country for an entire year of daily work. Where do we sign up? Of course, this is clearly unsustainable and shows how distorted the market has become with the Fed juicing rates lower, forbearance programs stalling inventory hitting the market, and rental moratoriums have created a giant pause to the normal machinery that makes a housing market healthy – which is good wages and good jobs for many. Let us explore some additional data here.

One of the biggest surprises with Covid-19 is that the housing market has only gotten hotter. But it isn’t because the overall economy is great and people are getting amazing jobs in all sectors. What is happening is a massive trend in overall inflation as easy money is flooding the economy, we have large mortgage forbearance activity, record low interest rates, and a record low inventory in homes for sale. That is right, there is a record low number of homes available for sale on the market. In places like California we continue to see a record number of Millennials living at home with their parents. With people now spending more time at home, real estate is taking over a big part of our lives. With that being said, how will all of this play out once the economy starts opening up in a new normal environment?

As we embark on a New Year, we can now look back on 2020 and conduct an analysis on what is happening on the ground here in California. Overall real estate prices nationwide did amazingly well amid the pandemic. Even though sales volume was low, record low interest rates, mortgage forbearance, and people being stuck in place, real estate overall did great. Although in places like California, we saw a record number of young people living at home with parents from an already high number. Yet we saw some high profile moves out of California including Tesla, Oracle, and Joe Rogan and they all started singing a similar song: high taxes, NIMBYism mentality, and ultimately a place that is getting too expensive for most working-class residents. And while home prices went up, if you look below the headlines there is a major shift happening.

What do you get when you mix in a global pandemic, low housing inventory, a Fed that is juicing the markets, a mortgage payment moratorium, and baby boomers addicted to Facebook? You get a market that is being pushed up by house humping boomers while many younger Americans are struggling to get by in rentals or are living at home with mom and dad in quarantine. In this article we will look at two divergent stories – one includes home prices surging on record low inventory while another shows a softening rental market. Let us explore the numbers.