Katerina Krumwiede wasn’t looking to move.
She and her husband, Rob, recently spent “well over” $100,000 on a complete remodel of their Encino, Calif., house that added a backyard gazebo, custom kitchen countertops, new roof and imported bathroom tiles from Spain.
But Krumwiede, 40, said the single-story house still lacked quiet space — a drawback when the COVID-19 pandemic hit and she had to work from the master bedroom if she wanted to escape the sound of her husband’s frequent video calls.
Eventually, it became too much, setting off a chain reaction that led the family to sell their Encino home for $1.5 million and purchase a larger one in Calabasas for $1.7 million.
“It was very uncomfortable sitting on the bed all day long,” said Krumwiede, an entertainment industry lawyer. “My back was really hurting.”
In recent months, the national housing markets have been red hot. Bidding wars are common. Homes fly off the market in days.
In November, the regional median home price jumped 11%, while sales climbed 19%, according to DQNews.
Many experts say the frenzy is due in large part to the pandemic. Although many low-wage workers worry they’ll face eviction, the economic downturn has left relatively unscathed the higher wage workers more likely to buy homes in the first place.
Federal Reserve policy has helped drive mortgage interest rates into the recently unheard of 2% range at the same time people are spending more time at home and realize they could use more space.
But the torrid pace of the for-sale market raises the question: Just how long can this continue?
For some, the pandemic simply accelerated decisions planned for the near future. And unemployment is still high, which will hinder home-buying dreams for others.
This was supposed to be the year of the wedding for Derek Fleck and his fiancée, Hayley Atwater, both in their late 20s. Next year, the couple, who met as college freshmen, would get serious about owning a home for the first time.
The pandemic upended everything. With no need to immediately plan for the big day, they found themselves not only with time to home shop, but also a new desire and added ability.
Fleck, a human resources manager, and Atwater, a data analyst, were juggling work calls in a one-bedroom Santa Monica, Calif., apartment and their savings swelled because “we weren’t going out and traveling anywhere like we normally would,” Fleck said.
In August, the couple closed on a $769,000 two-bedroom condo in the Playa del Rey neighborhood of Los Angeles, which allowed them to stay near friends but also have more space at a price they could afford.
“It’s roughly double the one bedroom’s square footage,” Fleck said. “It’s one of our favorite parts about living here.”
Although the pandemic accelerated purchases, there are plenty of people who didn’t buy who probably want to, said Danielle Hale, chief economist at listing website Realtor.com.
She noted that large numbers of millennials entered their 30s in 2020 and will continue to do so for several years.
Such demographic factors are one reason the company is forecasting strong price appreciation across the U.S. in 2021, including a 7.3% increase in the combined Los Angeles-Orange counties metro region.
“We have this huge wave of young people who are at ages where historically they thought about getting into the housing market as a homeowner,” Hale said.
Rick Palacios Jr., research director at John Burns Real Estate Consulting, said would-be buyers should have some more options to choose from next year as people increasingly list their homes for sale and builders ramp up.
That added supply, along with the fact there’s only so much people can afford, should temper price growth somewhat in 2021.
But Palacios and other experts pointed to additional factors that will keep prices rising substantially.
Interest rates are expected to remain low, which typically lures people into the market. Lower rates can make homes affordable, but at the same time push prices higher by allowing people to bid more.
The Federal Reserve, and others, also predict unemployment will drop next year as the vaccine rollout continues. Then there are people who have maintained employment throughout the pandemic and have saved because they’re not traveling or eating out.