High demand for more space due to WfH and a desire for home leisure time due to lack of venues to visit, combined with low interest rates to shore up the markets. Is this really a mystery?
The other factor is that some people did very well during the lockdown. Overall yes a lot of people suffered, but if you had a well paid job that you could do from home, and didn't need to pay for a season ticket to go to work, buy lunch, haven't spent on a big holiday, haven't been out to the theatre or restaurants, then you may well have expanded your savings quite significantly. With the low number of houses on the market, there doesn't have to be huge numbers of people in that position for them to move house prices.
For example at least commenting from an European perspective nothing makes sense:
- Real wages (for example in the European Union) are decreasing or stagnant for years - Example data point for 2020 for ex: https://www.statista.com/statistics/264605/development-of-re...
- Most companies are only alive due to governments subsiding jobs, that in reality, do not exist anymore. Ex: KLM and Air France pilots receiving some of the highest salaries in the world, while their airplanes sit on the tarmac.: https://simpleflying.com/air-france-klm-traffic-drop/
The main issue is that very shortly, the increased debt that most countries were forced to incur will be due soon. Very soon and in, ( what else ? ), increased taxation: https://www.bloomberg.com/graphics/2021-coronavirus-global-d...
All this should mean most persons should thing two times before paying inflated values. Clearly is not not happening. In Europe it is common to see interviews with couples who just got into the so called property ladder. Most are actually ashamed of confirming how much they paid for the microscopic house they just purchased...
- Not sure in the US, but in Europe very few young workers are able to get permanent contracts instead of temporary 2-3 years contracts. By law, most countries require those to become permanent contracts after 2-3 renewals but that is not happening. European banks in the last few years, significantly increased the requirements to qualify for a mortgage, requiring both spouses working, permanent work contracts required,minimum apportion of capital sometimes of 10% to 15 % of the value of the house. Just a minority can rely on the "Bank of Papa and Mamma". So this also fails to explain some of the bidding wars seen in the last few months.
It is mostly driven by speculators flush with cheap money and central banks complete irresponsibility. It also shows another massive failure on the part of banks to perform their due diligence concerning future prospects.
Cue now a US budget that throws away 100 years of economic theory and the world will be in for a very VERY rough ride: https://www.nytimes.com/2021/05/27/business/economy/biden-pl...
Initially will be a party worthy of the scenes in the Wolf of Wall Street. The core question here is at which point does THIS matter ? : https://www.visualcapitalist.com/20-trillion-of-u-s-debt-vis...
A vast number of UK retirement villages would like to disagree with you.
Construction rates in England: https://research.euro.savills.co.uk/_images/350.jpg
Occupancy rate in London: https://i.imgur.com/jX1OpmS.png
The market was nearing peak numbers, akin to 2006-2007 pre crash, before the pandemic shutdowns.
Partially because variable rate loans are still a thing. And the FED has kept prime rates at basically 0 since the last crash. And add in a pandemic where there’s now a desire for home office setups….
The oldest Millennials are 40, and more and more of that contingent are arriving in their 'family years', especially given the higher average ages of both marriage and pregnancy.