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Illustration: Sarah Grillo/Axios

It's a discouraging scene: Bidding wars, soaring prices, and fears that homeownership is becoming out of reach for millions of Americans. We're in a housing frenzy, driven by a massive shortage of inventory — and no one seems to be happy about it.

Why it matters: Not all bubbles burst. Real estate, in particular, tends to rise in value much more easily than it falls. Besides, says National Association of Realtors chief economist Lawrence Yun, this "is not a bubble. It is simply lack of supply."

Data: National Association of Realtors; Chart: Axios Visuals

By the numbers: America has a record-low number of homes available for sale — just 1.03 million, according to the latest NAR data. That compares to a peak of more than 4 million at the height of the last housing bubble, in July 2007.

  • The total number of active listings this week is down a record 54% from the same week a year ago, per Realtor.com. That in turn has helped to drive national prices up 17.2% over last year.
  • Almost half of homes now sell within one week of being listed, per Redfin.
  • In Austin, Texas, the median listing price has risen 40% in one year to $520,000.

The big picture: Prices are being driven upwards by a combination of factors, including continued low mortgage rates, a pandemic-era construction slowdown, a desire for more space as people work increasingly from home, and a stock market driven increase in money available for downpayment.

  • A rise in financial buyers — large corporations buying up homes to rent them out — is only making the market tighter, and decreasing the number of owner-occupied properties available.
  • What's missing: Unlike the mid-2000s, this time around there's no exuberant culture of condo flipping. While interest rates are low, lending standards are still tight, making it hard to buy a house you can't afford.

The good news is that rents have not been rising nearly as fast as prices. They stayed roughly flat during the pandemic, and are now rising at perhaps a 4% pace, Yun says.

Homebuyers are the biggest losers. In order to win bidding wars, many of them are being forced to make rushed and risky decisions. Successful bids often need to waive any financing contingency or right to inspect the property.

  • That raises the terrifying prospect of putting down a large downpayment and then not being able to get a mortgage — and/or finding that the house requires hundreds of thousands of dollars in repairs.

The worst-case outcome, says Yun, would be if "rates remain low, demand picks up with new jobs, there's no increase in supply, and the only thing that moves is home prices, until people get priced out. That would mean we are creating a divided society of haves and have-nots."

  • The best-case outcome, on the other hand, would be a construction boom accelerated by President Biden's infrastructure plan, which would create more supply and help to stop the rise in prices.

The bottom line: Housing prices are likely to remain high and rising for a while yet.

Go deeper

Mike Allen, author of AM
1 hour ago - Economy & Business

Charted: GOP surged as Biden slumped

Expand chart
Reproduced from Gallup. (Independents were asked their party leaning.) Chart: Axios Visuals

Gallup polling found a huge shift in party preference over the course of 2021, from a 9-point Democratic advantage in the first quarter to a 5-point Republican edge in the fourth quarter.

Why it matters: It's the biggest swing in one calendar year for Gallup's 30 years of tracking.

Miriam Kramer, author of Space
1 hour ago - Science

A new NASA astronaut corps for the next era in space

Illustration: Aïda Amer/Axios

NASA's next crewed missions to the Moon will need a larger, differently-trained and multi-skilled astronaut corps to deliver on the agency's ambitions.

Why it matters: NASA has plans to fly astronauts to the surface of the Moon in 2025 and ultimately establish a long-term presence there. That goal requires a robust corps with new, specialized training in what it takes to live and work on the Moon — and NASA needs to start planning now.

China builds its own movie empire

Expand chart
Data: Gower Street citing Comscore; Chart: Kavya Beheraj/Axios

China blocked all four of Disney's Marvel movies from being released in its theaters last year, a grim sign for U.S. film giants being squeezed out of the world's fastest-growing box office.

Why it matters: The Chinese Communist Party is using domestic films as a key conduit for mass messaging aimed at achieving political goals, leaving little room for foreign views.

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