- Recent data on housing shows that sales remain strong, with only a small drop in prices.
- However, longer-term trends are likely to lead to significant drops in today’s high-priced markets.
- The shift towards a remote workforce will correct housing imbalances in markets that otherwise may have gone unsolved.
Many have feared a repeat of the 2008 housing crisis this year as the economy shut down. So far, however, signs indicate that the overall market is holding up well.
We’re still seeing strong home sales, particularly on lower-end homes. After a dip in March, April home sales came in at numbers near February’s high, even as many feared that potential buyers would stay home.
Sure, average prices are down about 8%, but we were coming off a strong market. And that decline is far less than the stock market dropped. Demand appears robust as lower interest rates have spurred more refinancing from homeowners, even as temporary mortgage forbearances soar.
But the real estate market isn’t like the stock market–it’s not built around fast trades and trends can start that take years to play out.
We’re At the Cusp of the Next Real Estate Crisis
That’s why a crisis is likely to unfold that could prove devastating in dense urban markets such as New York, Miami, and the Bay Area.
How? With the rise in work-from-home arrangements.
While many of these arrangements have been temporary, several companies have already decided to permanently shift their workforce towards some level of remote work.
Many Wall Street banks are working on a way to rotate employees in and out of offices permanently. Facebook announced that half its workforce would be remote within ten years. Twitter became one of the first companies to announce that all their workers could take advantage of such arrangements.
The long-term implications are enormous. It will likely lead to a shift away from cities and…