The US housing market has been experiencing exponential price increases exceeding what economic fundamental would justify, according to a study from the Dallas Federal Reserve Bank, for more than five consecutive quarters.
“The gap between the actual price-to-rent ratio and its fundamental-based level in the U.S. has grown rapidly during the pandemic—comparable to the run-up of the last housing boom—and started showing signs of exuberance in 2021,” note the report’s authors. “The exuberance statistic confirms that recent increases are far from ordinary.”
Possible reasons for this exuberance are historically low interest rates, pandemic-related US fiscal stimulus programs and COVID-19-related supply chain disruptions and associated policy responses, according to the Dallas Fed.
According to real estate information portal Zillow the typical US home was worth 32.4% more this February than in February 2020.
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