Some real estate experts predict that the obstacles to finding affordable housing as wages lag behind prices will likely ease as the nation moves further beyond the pandemic.
Adam Perdue, a research economist at the Texas Real Estate Research Center at Texas A&M University, said the gap between wages and housing prices grew during the pandemic, increasing unaffordability. But he predicts that by 2024, housing prices will again decrease as the market adjusts to what can be afforded.
“What we expected is a small drop (in prices) this year and just relatively flat for the next few years until everybody’s wages catch back up and adjust over time to a level that can sustain these prices,” Perdue said. “Then we’ll see the normal price increase path after that.”
At the onset of the coronavirus pandemic in early 2020, the Federal Reserve slashed interest rates to support spending by lowering the cost of borrowing for households. The decision flooded the market with buyers who were suddenly embracing a work-from-home lifestyle and taking advantage of the low rates.
This caused pressure on prices, as limited supply could not keep up with demand, Perdue said.
“Housing prices have been going up faster than the price of everything else, in general,” Perdue said. “And then they have also been going up faster than wages.”
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