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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

Miriam Kramer, author of Space
41 mins ago - Science

China makes history with successful Mars landing

A model of the Tianwen-1 Mars rover is displayed during an exhibition at the National Museum of China in Beijing. Photo: Wang Zhao/AFP via Getty Images

A Chinese lander carrying a rover successfully touched down on Mars for the first time, state media reports.

Why it matters: This is the first time China has landed a spacecraft on another planet, and it launches the nation into an elite club of only a few space agencies to successfully make it to the Martian surface.

1 hour ago - World

UN: 10,000 Palestinians displaced in Gaza as Israel-Hamas fighting escalates

A Palestinian woman walks after she collects her belongings inside her damaged house following an Israeli air in the northern Gaza Strip. Photo: Ahmed Zakot/SOPA Images/LightRocket via Getty Images)

The United Nations warned Friday that ongoing fighting between Israel and Hamas "has the potential to unleash an uncontainable security and humanitarian crisis," in not only the occupied Palestinian territories and Israel, but "the region as a whole."

The big picture: More than 125 Palestinians, including 31 children have been killed in Gaza since fighting began Monday, per the Palestinian Ministry of Health. Seven people, including one child, have been killed in Israel, according to Israeli authorities.

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