Abstract: During the COVID-19 Pandemic, the US housing market has grown at its fastest pace in the past decade. In this paper, three pandemic related factors are analyzed which could possibly cause the housing boom, as well as its effects on household finance and the US economy. First, housing supply has been kept low by a pandemic induced labor shortage as well as high input prices such as lumber. Second, large number of households working from home due to the pandemic has led to increased housing demand. Third, historical low federal funds rate and mortgage rates have encouraged housing mortgage borrowing. As a result, the high cost of housing has had negative impacts on consumer finance, especially to people hit hard by COVID-19 with low income or unemployment. Government policy should be enacted to alleviate the effects of a high cost of housing. Yet, this housing boom has not reached pre-2008 levels so a severe economic crisis is unlikely.
Keywords: COVID-19 pandemic; housing market boom; work from home; mortgage rates; interest rates; housing supply; labor shortage; consumer finance; household financial behavior; rent growth.
Title: COVID-19 Pandemic Housing Boom and Its Impact on Household Finance and US Economy
Author: Howard Zhang
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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