The Great Relocation Continues: Mass Exodus Is Driving Home Prices To Insane Levels

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The Great Relocation continues in 2021, with a large number of people moving away from the West Coast and major urban centers to find safety and comfort in smaller areas. The mass exodus that started a decade ago, has significantly intensified during the peak of the health crisis and even more so during recent months. As large swaths of the population have been migrating to more desirable regions, that, in turn, has resulted in the hottest real estate market ever. But supply can’t keep up with the extraordinary demand, consequently making home prices reach new record-highs.
The real estate price bubble is at insane levels across several cities of the country. According to the Wall Street Journal, the picturesque city of Coeur d’Alene, in Idaho, has the most splendid housing bubble of all. The median home price in the region has skyrocketed 47% in the past 12 months, to a whopping $476,900.
Bidding wars are being registered all across the nation. For instance, in Denver, a new survey by a local expert reported that the overwhelming majority of more than 100 listed homes in the metro area were sold for above the asking price. “In one extreme case, a home put on the market at just over $400,000 closed at more than $500,000,” said Jim Smith of Golden Real Estate, who argued that as supply continues to shrink, things are about to get a lot more intense in the coming months.
The National Association of Realtors informed that properties across the country have been typically sold in a record low time of 18 days last month, and 80% of all homes sold in March were on the market for less than a month. Many people have been leaving California and fleeing to Texas. In fact, Real estate executive Rogers Healy, who is based in Dallas, recently told in an interview that “70% of the people moving in are from California”.
The executive argues that most Americans from regions like California are motivated to move due to the state’s high state taxes. But the Texas housing price bubble isn’t any smaller. The median price of a home in the Lone Star State is currently at the highest level in history, at around $353,000 – a 17% increase from a year ago. Overall, U.S. home prices are incredibly more inflated today than they were last year. According to NAR, the median sale price of an existing home reached $329,100 last month, whereas the housing inventory of homes available for sale plunged by almost 50%.
Inflated prices aren’t exclusive to the housing market. Also due to a supply and demand crisis, used car prices have climbed over the past year. The Manheim U.S. Used Vehicle Value Index has continued to soar through the month of April, to a new record, going up by 6.8% in the first 15 days of the month, Bloomberg noted. But the index went up a staggering 52% from the same time last year to 191.4.
Gasoline prices just keep on rising as well, jumping more than 9% in the past month, without any expectations to slow down anytime soon, according to the US Bureau of Labor Statistics’ Consumer Price Index. Even though there are numerous signs that inflation is already creating major price bubbles in several sectors of the economy, the Federal Reserve continues to argue that inflation levels are actually low and are “not a concern” for the time being. If we circle back to the housing market and consider that the price of lumber has shot up a shocking 232 percent since the start of the health crisis, we can definitely realize that inflation should be a top concern right now.
If nothing is done to reverse the damages of runaway inflation, experts are warning that we might see a housing market crash sooner rather than later. The senior economist at Fastmarkets RISI, Dustin Jalbert, alerted that “the market is in trouble and it could spiral out of control in the next few months,” asserting that the real estate industry is at risk of overheating, and supply and demand imbalances may add immense pressure on the price bubble, possibly triggering a major market implosion and collapsing property values in the process.
These insane levels of inflation are already leading to dangerous cracks in the foundations of multiple markets and segments of our economy. And now, events are playing out much faster than experts anticipated. So we should keep paying close attention to the troubles that will emerge in the months ahead, and considering that our leaders keep flooding the system with more money, it seems that we’re getting critically close to the point of no return.

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