The Not-So-Great Housing Crisis Of 2021 Essay Sample

The Covid 19 pandemic changed the world in a negative way. People lost their jobs and businesses closed. Millions of deaths have also been witnessed globally and the health sector has been under intense pressure. Pharmaceutical companies have made positive milestones by developing coronavirus vaccines. However, the vaccines are yet to reach many people, and some are even against the vaccines. In addition, various coronavirus variants are being recorded, which means that returning to normalcy may take longer than anticipated. The pandemic has caused unimaginable havoc across the world and one sector that has been greatly affected is the housing market. 

Due to the unexpected disruption caused by the Covid 19 pandemic, people lost their source of livelihood, which means that they could not pay their mortgage. Hence, people have lost their houses leading to a housing crisis. Additionally, tenants have been unable to pay rent because of disrupted businesses and jobs lost. People have been forced to move to cheaper houses, which has led to their increased demand. High-end houses are struggling to secure occupancy due to the strained economic conditions 

There are other factors, other than the pandemic, that have led to the bubble of the housing market. Lumber prices have risen steeply, almost by triple within the last year, because of increased demand for timber needed to construct new homes, or for home renovations (Stewart). In addition, the global production of wood has also decreased. Experts believe that people increase the time they spent at home, more so due to the policy changes attributed to curbing the spread of the coronavirus (Stewart). Many organizations have opted for their employees to work from home, culminating in the augmented interest in the renovation of living spaces and homes. 

The relocation of companies has led to an intense increase in demand for housing in certain cities and regions. For instance, an organization such as Tesla, which is constructing a 2,000-acre factory worth over one billion dollars for its new line of Cyber trucks, will create over 5,000 jobs (Lewis and Adler). The transition, as well as Elon Musk, Tesla’s CEO, moving to Texas and Neuralink and SpaceX also expressively upgraded their operations in the Lone Star State. Musk's activities are an example of some of the numerous technological organizations recently shifting to Texas. Some of these big corporations are Google and Apple (Press Release). Therefore, it is expected that there will be a population surge in Texas, which will lead to an amplified demand in the Texas housing market. The cost of housing in Texas is also expected to rise, which creates pressure even on existing residents.

The is a new Covid 19 variant that has been sourced from South Africa, which has led to a new surge of infections. Hence, the surge led to the crashing of the stock markets on Black Friday. Numerous questions have arisen due to the new variant. The questions revolve around the resilience of the US housing markets and whether the new variant will lead to a deflation of the residential housing markets (Campisi). However, the housing markets will remain stable based on the economic pluses. 

If a housing market crash is to be experienced, some factors will come into play. The prerequisite to raising interest rates and the series of government debts will be some of the major factors that will lead to the housing market crash.  This is why people are raising their concerns in Washington about the increasing interest rates. People have realized that this will be a major issue for the house market industry (Campisi). During the burdensome debt load, the new Covid variant, which has been deemed to be deadlier than any other variant, will probably lead to another global shutdown. The fear, bankruptcies, and lost jobs would lead to even the most zealous home buyers shying away from purchasing homes at these ever-increasing prices. 

Nevertheless, experts believe that even with the ever-increasing home prices, the housing market will not crash as this has happened before. The price has always been bubbly, but the dynamics and fundamentals that surround the market have always been robust (Campisi). Hence, for the housing market to be shaken, something external must enter the sphere. 

The wave of the Covid 19 pandemic has in some ways affected the housing market as people have lost their jobs and income, indicating that they cannot afford to buy houses at exorbitant prices. However, in numerous ways, an active housing market and increased demand may point to a positive consumer sentimentality, and strong economic growth, more so in smaller, newer cities on the rise. Economists, nevertheless, have struggled to evaluate whether the soaring house prices and pent-up demand are the cause or are the effect of a "housing market bubble." This is a concept and term which possess potentially portentous connotations. The public health crisis and the global pandemic have created worldwide turmoil, which is worrying for the housing market.