The number of homes for sale reached an all-time low in December, as buyers remained active and eager to buy even during the holiday season. National inventory declined by 39.6% over the last year, and fell below 700,000 for the first time, according to a new report from realtor.com
The U.S. housing market has been a consistent bright spot during the coronavirus crisis, buoying the economy, which in December lost jobs — 140,000 of them — for the first time since April. Even during such uncertain times, mortgage rates remain at historically low levels and many Americans are seeking more space as their homes have transformed into offices and schools overnight.
But given the low inventory and the quick turnaround of homes, middle class Americans are finding homeownership more inaccessible than ever, according to Grant Cardone, a real estate investor who manages a $1.4 billion portfolio of multifamily properties and also stars in Discovery Network’s (DISCA) reality series, "Undercover Billionaire.”
“The middle class are going to get priced out permanently. The great divide will get wider, wealthy people are picking up second and third homes like most people buy Skittles or the way we were buying toilet paper back in March. The average person is not able to grab a house today. After the pandemic, the banks went to 20% down, now they're doing double and triple checks to see if your future employment is stable,” he said during an interview with Yahoo Finance Live on Friday.
‘It’s going to get more and more difficult’
Homes are selling quickly in this environment, spending an average of 66 days on the market as of December — 13 fewer days on average than in 2019, according to realtor.com. U.S. home price growth surged in October to levels not seen in six years, Yahoo Finance’s Amanda Fung reported.
“It's going to get more and more difficult for people to buy homes in the lowest interest rate environment we've ever had, the middle class will not be able to take advantage of this. This validates the concept which I've been pushing... cash is trash and the wealthy are turning cash into real assets,” he added.
Among other trends, the exodus out of expensive cities like San Francisco to Colorado, Texas, and Florida is one that’s unlikely to reverse course after the pandemic, says Cardone. Tech icons like Elon Musk, Alex Karp, and Larry Ellison are driving the new normal and diluting the value proposition of Silicon Valley. Cardone moved his business from Southern California to Miami in February, contending in a blog post that the Golden State made doing business there too burdensome.
“Migration...it's no temporary thing,” Cardone told Yahoo Finance. “This is going to happen.”
Melody Hahm is Yahoo Finance’s West Coast correspondent, covering entrepreneurship, technology and culture. Follow her on Twitter @melodyhahm.