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Two Years Later: How the Pandemic Has Rocked the U.S. Housing Market

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This week marks the two-year anniversary of the coronavirus pandemic, which the World Health Organization officially declared a pandemic on March 11, 2020.

The housing market has changed drastically since then—there are now half as many homes to choose from, and prices have surged 34%, according to a new report from Redfin, the technology-powered real estate brokerage.

Unless otherwise noted, the data in this report represents the four weeks ending March 6, 2022, compared with roughly the same period two years earlier (the four weeks ending March 8, 2020). The records in this report date back to 2017 unless otherwise noted.

Buyers Have Half as Many Homes to Choose From

The number of homes on the market is down 49.9% from two years ago to a record low of roughly 456,000.

Remote work and record-low mortgage rates prompted scores of Americans to move during the pandemic, intensifying a housing shortage that began in the wake of the 2008 financial crisis. With so few homes available to purchase, house hunters have waged fierce bidding wars, causing prices to surge.

Homes Are 34% More Expensive

The median home sale price is $369,125, the highest on record and up 33.6% from $276,225 two years ago. That's a significantly larger jump than the prior two-year period (2018 to 2020), during which home prices grew about 10%.

The Share of Homes Selling for Above the List Price Has Doubled

Homebuyers are now twice as likely to pay above the asking price as they strive to beat out the competition, which is one reason home prices have climbed so high. Nationwide, 46.3% of homes sell for more than the asking price, up from 21.8% two years ago. Some bidders are paying significant premiums to win. Nearly 6,000 homes have sold for $100,000 or more over asking price so far this year, up from 2,241 during the same period last year.

Homes Are Selling Twice as Fast

The typical home sells in 25 days, down from 53 days two years ago. A record 44.7% of homes sell within just one week, compared with 30.8% two years ago.

A Record Share of Homebuyers Face Competition

A record 70% of home offers written by Redfin agents faced bidding wars on a seasonally adjusted basis in January—the most recent month for which Redfin has data. That's up from 33.4% in April 2020, the earliest month in Redfin's records. An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid.

Nearly One-Third of Homebuyers Are Looking to Relocate

A record 32.4% of Redfin.com users nationwide looked to move to a different metro area in January—the most recent period for which data is available. That's up from the previous peak of 31.5% in the first quarter of 2021 and significantly higher than before the pandemic, when about one-quarter of homebuyers were looking to relocate.

The most popular destinations in January were Miami, Phoenix, Tampa, Sacramento and Las Vegas. Relatively affordable, warm metros normally top the list, and have only become more popular during the pandemic as people have left expensive coastal markets in search of lower prices and more space in the Sun Belt. San Francisco, Los Angeles, New York, Seattle and Washington, D.C. were the top metros homebuyers looked to leave in January.

Mortgage Rates Have Returned to Pre-Pandemic Levels After Plummeting to a Record Low

Mortgage rates are back above pre-pandemic levels after hitting an all-time low of 2.65% in January 2021. The average 30-year fixed mortgage rate was 3.76% during the week ending March 3, 2022, according to the latest data from Freddie Mac. That's up from 3.29% two years earlier, when early signs of the pandemic had already started to put downward pressure on mortgage rates. Rates started rising sharply at the end of 2021, though they've dropped slightly in recent weeks as Russia's invasion of Ukraine has shaken global financial markets.

The Second-Home Market Is Booming

Homebuyer demand for second homes was up 87% from pre-pandemic levels in January—the most recent period for which data is available. That's the highest level in a year and just shy of the record 90% gain in September 2020. It's worth noting that preliminary February data suggests second-home demand slowed as mortgage rates jumped.

Interest in second homes surged during the pandemic because many affluent Americans purchased vacation properties to escape crowded, boarded-up cities. Additionally, some Americans bought second homes not as vacation properties, but as full-time residences to live in while they rent out their old homes.

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Despite queue of buyers, homebuilder sentiment drops again

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On Thursday, the Bureau of Labor Statistics reported the same trend that all Americans have seen lately: the inflation rate of growth is rampant and doesn’t show any sign of easing up due to the Russian Invasion of Ukraine.

The Consumer Price Index for all Urban Consumers “increased 0.8 percent in February on a seasonally adjusted basis after rising 0.6 percent in January…. Over the last 12 months, the all items index increased 7.9 percent before seasonal adjustment.”

For the first time since September 2021, homebuilder confidence in the market for newly built single-family homes has dropped below the 80-point mark, according to the National Association of Home Builders (NAHB) and Wells Fargo Housing Market Index (HMI), which was released on Wednesday.

In March, the index dropped to 79, two points below its February reading. This is the fourth straight month of homebuilder sentiment decline.

The NAHB/HMI report is based on a monthly survey of NAHB members, in which respondents are asked to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. Scores for each component of the survey are then used to calculate an index where any number over 50 indicates that more homebuilders view conditions as good than poor.

While buyer demand remains high, experts say ongoing lumber and building material supply side issues, labor shortages, rising construction costs and expectations of higher interest rates are contributing to this downturn in homebuilder confidence.

“While builders continue to report solid buyer traffic numbers, helped by historically low existing home inventory and a persistent housing deficit, increasing development and construction costs have taken a toll on builder confidence,” NAHB chairman Jerry Konter said in a statement.

Konter called on lawmakers to enact policies that ease supply-chain issues and improve homebuilders’ access to lumber and other building materials.

The HMI index gauging current sales conditions fell three points to 86, while the gauge measuring sales expectations in the next six months fell an astounding 10 points to 70. The component tracking traffic of prospective buyers, however, rose two points to 67.

“The March HMI recorded the lowest future sales expectations in the survey since June 2020,” NAHB chief economist Robert Dietz said in a statement. “Builders are reporting growing concerns that increasing construction costs (up 20% over the last 12 months) and expected higher interest rates connected to tightening monetary policy will price prospective home buyers out of the market. While low existing inventory and favorable demographics are supporting demand, the impact of elevated inflation and expected higher interest rates suggests caution for the second half of 2022.”

Regionally, the three-month moving averages for regional HMI scores fell in the Northeast (69), Midwest (72) and South (83), dropping seven, one and three points respectively. The West was the only region to see an increase with a gain of one point, bringing the index reading to 90.

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Mid-April Is the Best Time to List, Report Says

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Home sellers who list during the week of April 10–16 will be able to take advantage of the spring buying season’s anticipated strong demand, high asking prices, quick home sales, and lowered competition from other sellers, according to realtor.com®’s fourth annual Best Time to Sell Report. Those who list that week will likely get a head start on the competition.

Each year, realtor.com®’s research team analyzes recent market conditions to pinpoint the optimal week to list a home. The team found home prices and buyer demand are rising earlier in 2022 than in years past.

“Homeowners who are thinking about selling this spring still have time to get ready,” says Danielle Hale, realtor.com®’s chief economist. “Preparation is especially important this year since market dynamic could shift quickly along with factors like rising mortgage rates, inflation, and the ongoing conflict in Ukraine.”

Mortgage rates have been rising more quickly than expected. That could prompt potential home buyers to move into the housing market more quickly this spring to lock in lower monthly payments.

Realtor.com®’s analysis shows that accelerating home prices also may prompt buyers to take advantage of the spring market earlier than in the past. As such, sellers who list from April 10–16 could secure asking prices that are nearly 11% higher—or $39,000 more—when compared to the start of this year, according to realtor.com®’s research.

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Some Colorado Springs City Council members skeptical about proposed grass rules

 
 

A few Colorado Springs City Council members expressed some skepticism Monday about a proposed rule that would limit the size of high water use lawns for newly constructed homes. 

"I just have a hard time telling American citizens what and when and how they are able to do something on their own property," Councilman Randy Helms said. 

The new rule would limit how much high water use turf grass, like Kentucky bluegrass, could be planted when a new home is built to 25% of the property that is open to landscaping and not covered by the home, sidewalk and driveway. The rule would also require high water use lawns be no less than 100 square feet in size, Planner Supervisor Morgan Hester said. No existing homes would be subject to the new rule. 

For example, if a home had 1,000 square feet of ground available for landscaping, under the new rule 250 square feet of it could be planted with high water use grass, she said. 

The goal of the rule is to help ensure the city can sustain its rapid growth with the water resources available. The Pikes Peak Regional Building Department issued 2,861 permits for single family homes in 2021, a presentation to city council on Monday showed. The city is also expecting many thousands of new homes to go in over the coming decades as the population grows from about 470,000 to 723,000 over the next 50 years, according to Colorado Springs Utilities projections. 

"I want to make sure we have regulations that can support and sustain that growth," Director of Planning and Development Peter Wysocki told the council during the presentation. As someone who loves lush grass and trees himself, he said, it's a fine balance. 

The discussion about lawns followed an announcement by the Bureau of Reclamation on Friday that Lake Powell's water level is expected to temporarily drop below 3,525 feet in elevation soon. The elevation is set to help protect electric generators at the lake. The lake's elevation reflects an abnormally dry winter season on the Colorado River basin, the bureau said. Colorado Springs relies on water from the basin for some of its water supplies. 

The rule would allow new homeowners to plant other native grasses that could cover more area in their yards, such as buffalo grass, blue grama grass and shady fescue, Hester said.

Councilman Dave Donelson questioned whether those native grasses could provide the same playing spaces residents are accustomed to enjoying. 

"You can go out and walk barefoot in your backyard in blue grass. I don’t know if that's the same with these low water use grasses," he said. 

Councilwoman Nancy Henjum and Councilman Wayne Williams both seemed open to the new rules, although Williams was interested in greater detail about how the rules would be enforced if someone made additions to their home that changed the amount of land available for landscaping. 

If the city doesn't take some steps around regulating landscaping and water use and the community experienced an extended drought, drastic steps might be necessary, Williams said. 

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Colorado resorts expect next ski season to be pretty normal, but some coronavirus changes may stick around

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Vail Resorts chief Rob Katz on Friday told passholders that the company is not planning to use its reservation system in the 2021-22 season.

A year ago this week, lift-served skiing was broken. 

Ski areas around the planet ground to a sudden halt in a desperate effort to slow the spread of contagion. Operators were distributing food from spring-break-stocked coolers and figuring out what to do with jobless workers in employee housing, all while slashing budgets and planning for what would be a historic 2020-21 ski season, upended by the coronavirus pandemic.

After a year of refunds, irked skiers, wary workers, low snow, reservations, capacity caps and long lines, it appears the resort industry is about to return to normal. And as resort operators assess the damage of the last year, the wounds are, for some, surprisingly, superficial. That’s thanks largely to drive-up skiers escaping cities and aggressive cost-cutting by resorts. 

And as resorts unveil prices and plans for the 2021-22 ski season, it looks like the resort experience will soon be back on track, with a few pandemic-adjustments sticking around — but not that advance-reservation business.

“It was an amazingly difficult year on our employees and an amazingly successful year when you consider the headwinds,” Alterra Mountain Co. chief Rusty Gregory said. “The fear that struck our hearts shortly after we closed down last March — and the fear we had really all summer —(the reality) was much better than the various catastrophic scenarios we had worked up.”

Alterra competitor Vail Resorts also emerged from the pandemic in better shape than expected, with earnings and revenues for the start of 2020-21 down 27% compared to the previous season. That was a smaller loss than projected and Wall Street responded favorably, with Vail Resorts’ stock at all-time highs for the last two weeks. 

On Friday, Vail Resorts chief Rob Katz told passholders that after developing and installing a mandatory booking system across all its 34 North American resorts, reservations are being mothballed. The Vail Resorts reservation system likely will book more than 12 million skier days this season, considering visitation of 13.7 million and a roughly 8% decline so far in 2020-21.  

“For anyone worried that the absence of a reservation system will lead to longer lift lines, we have extensive learnings from this season around lift loading efficiencies and are implementing new strategies to materially reduce wait times,” Katz wrote in his letter to pass holders.

Katz also announced plans to quadruple the company’s customer service staff after skiers were left waiting for updates on rebates and refunds this season. (In a December letter to pass holders, Katz apologized for “unacceptable” wait times for skiers calling in to the company’s overwhelmed representatives.)

It’s probably too early for resort operators to begin detailing changes that could — or should — linger post-COVID. But one thing is certain: In the depths of a once-a-century global pandemic, skiers might not fly, shop and après, but they will go skiing. Especially if they can drive to the slopes.

One change that isn’t just lingering for Alterra Mountain Co.’s 15 North American ski areas but “is accelerating as fast as we can put money and people power into it,” Gregory said, is the digital guest experience. Contact-free buying and mobile technology got a swift upgrade this season and will remain a big part of resort business plans. 

Alterra had 40 eateries on a mobile app this winter, enabling skiers to not just book tables, but purchase food for ski-up pick-up. 

“It worked unbelievably well and became a big part of our business this year,” Gregory said.

At the resort operator’s dozens of restaurants, rental shops, ticket windows and even lift lines, phone apps allowed for virtual queuing to reduce the crowding and the inconvenience of waiting in a line. 

“Just trying to make sure we better match capacity available with the crowds,” Gregory said.

Arapahoe Basin last week revealed a change from lessons learned this season. In a first-ever tactic in the industry-shifting season pass war, the Summit County hill will restrict pass sales for the 2021-22 season, cutting sales by 10% from this season. And it will be capping daily lift tickets, which can only be bought online. The resort expects to sell out weekends next season. Before the pandemic, it was rare to hear about any resort ever turning away skiers.  

Reducing available tickets is a significant detour from the industry’s relentless push to sell more passes. (Vail Resorts, for example, reported 1.4 million Epic Pass sales for 2020-21, a 20% increase from 2019-20.)

“We are actively working to reduce the number of skiers on weekends and holidays,” Arapahoe Basin boss Al Hencroth wrote in his blog post announcing the new pass plan. “We have learned so much since COVID forced us to hit a daily target of skier numbers.”

Like Vail Resorts’ shareholders, Arapahoe Basin’s owner is bullish on skiing. Canada’s Dream Unlimited Corp. last month reported the Summit County ski area generated $24.2 million in revenue in 2020, down 38% from the 2019. But Arapahoe Basin is surging this winter. The company last month told investors the resort is “producing impressive margins” with “strong pass sales” and “relatively consistent results” in yet another pandemic-addled season. 

Dream Unlimited chief Michael Cooper in February told investors that the 2019 decision to part ways with Vail Resorts as a partner on the Epic Pass was working well. Despite the capacity limits to prevent the spread of contagion, Arapahoe Basin earned more money in January 2021 than any previous January. 

“And I think that this year, we’re likely to have probably our second-best year ever,” Cooper said of the ski area Dream Unlimited acquired in 1997.

While remote resort areas that rely on air traffic — like Aspen Snowmass and Whistler Blackcomb — endured painful declines in visitation, ski areas near urban areas, like Arapahoe Basin, are busy. 

“Those drive-up areas that frankly have always been popular — they were very, very popular this season because they were things you do at the drop of a hat and get out of the city,” Gregory said, pointing to healthy traffic at Alterra’s close-in resorts like Winter Park, Southern California’s Big Bear and Snowshoe in West Virginia.

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