It is safe to say that the majority of financial markets experienced unparalleled levels of turbulence in 2020. A global pandemic caused a sharp worldwide economic contraction, leaving a spate of global markets decimated—in many cases, both demand and supply were severely affected. The devastation has been nowhere as apparent as it has been in the United States, where the virus continues to wreak havoc, with the daily death rate remaining well above 3,000. But although most US markets endured bearish periods during 2020, the real-estate market was one of the few to experience continuous sustained growth, as house prices rose consistently throughout the year.
Of course, house-price appreciation in the US is nothing new. Since January 2012, prices have risen almost continuously by around 70 percent on average across the nation. But with the coronavirus severely impacting household incomes, it would only be reasonable to assume that the resultant lack of income security would have a dampening effect on demand for homes. Indeed, according to figures published in November by the US Congressional Research Service, nearly half of all American households had experienced “at least some loss of employment income since March 2020, when the economic effects of the pandemic first became apparent”.
And yet robust demand for homes coupled with decidedly constrained supply have allowed the housing market’s bullishness to continue throughout 2020—a bullishness that is expected to remain throughout the coming year at the very least. The outbreak of the pandemic at the end of 2020’s first quarter initially saw home sales plummet, as uncertainty gripped the country and led to a nosedive in market interest for both buying and selling homes. Government directives such as shelter-in-place and social-distancing requirements meant that buyers were discouraged from seeking new accommodations, while sellers were less keen on listing their properties and interacting with prospective buyers.
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