Housing recovery or iCovery? 10 iFactors driving unsustainable price spikes

Anyone reading the Boston Globe’s Spring House Hunt articles this week online or in print this weekend?  To put them into context, sharing my comment below originally intended for a YouTube video that’s been watched more than a million times and already generated over 8,300 comments:

Krystal Ball: The Next Housing CRISIS Is Here And The Villains Are Exactly Who You’d Expect

https://youtu.be/EBb9zf_zWvU

In my opinion, we’re witnessing a housing #iCovery, not recovery, driven by 16 record-low interest rates during 2020 alone!  As some have argued on the YouTube video, record low mortgages rates are counter productive because they induce irrational exuberance and drive unsustainable price spikes.  From my perspective as a longtime buyer agent / bubble watcher, they create “artificial purchasing power” and for those who choose to buy “marginal dollars” appear to be inexpensive when financed over 30 years.  That means that interest rate intoxicated homebuyers are easily manipulated in BLIND bidding wars.  

What other “i” Factors are driving the current price spike?  Thanks to the video above and research by John Burns featured in the WSJ, we can now add this following to this list of 10 iFactors:

Institutional buyers (200+ who are inflating prices, preventing overheated markets from correcting)

Please ADD your own to this list:

https://bit.ly/AprilFools_BidWarREform2021 (share via social media)

• Infected thinking (present moment bias driven by the pandemic)
• Impulse buying (63% of Redfin buyers have bid on a home they hadn’t seen in person)
• Irrational #BiddingWars (1 in 10 bidding wars = #100KoverAsk across MA during May 2021)
• Inventory shortage (artificially low because listing agents are selling listings pre-MLS, see below)
• InHouse Sales (aka #InventoryGate — http://bit.ly/InventoryGate_LIVTwts , share via social media?)
• Irresponsible bids (waiving inspections & appraisals)
• Interstate buyers (relocating from higher priced markets, urban centers on both coasts)
• Inexperience agents (approximately 40% have 2 yrs experience or less, and never seen a boom / bust cycle)
• Inadequate or inexperienced reporting (media is sensationalizing bidding wars without context supported by MLS data)

https://bit.ly/AprilFools_BidWarREform2021 (share via social media)

Thankfully, Krystal Ball provides a historical context that should cause prudent homebuyers to take a #RETimeOut.  Here’s why buyers in Boston may be risking a lost decade in housing if they buy now:

http://bit.ly/10XPriceSpike_LostDecadeRE (share via social media)

How would you rate the importance of the 10 iFactors above in your local market, and how do they compare to the last iCovery, see RealEstateCafe blog post from October 2013.