But central bank officials are also monitoring financial stability, so they are watching the price spike carefully.
Housing demand was strong in 2018 and 2019, but it really took off early last year, after the Fed cut interest rates to near zero and started buying debt guaranteed by the government. government to appease markets at the onset of the pandemic. Mortgage rates have fallen and mortgage applications have skyrocketed.
This was in part the point the Fed fought for to keep the economy afloat: Buying a home spurs all kinds of spending, on washing machines, curtains, and kiddie pools, c t is therefore a key lever for relaunching the economy as a whole. Feeding it helps revive struggling growth.
These low interest rates hit just as housing was entering a sweet spot for society. Americans born in 1991, the country’s largest group by year of birth, just turned 30. And as Millennials – the largest generation in the country – began to think about swapping that elevator-free fifth floor for a house of their own, coronavirus lockdowns took hold.
Suddenly, having more space has become essential. For some, several rounds of government stimulus checks have made down payments more feasible. For others, working remotely has opened the door to new domestic markets and possibilities.
Reina and David Pomeroy, 36 and 35, were living in a rental in Santa Clara, California with their children, ages 2 and 7, when the pandemic struck. Buying at California prices seemed like a pipe dream and they wanted to live close to their family, so they decided to move to the Boulder, Colorado area near Mr. Pomeroy’s brother.