The pandemic has transformed how we think about real estate (RE). Certain categories, like data centers and warehousing, have benefitted from accelerated trends in cloud computing and online shopping. Other areas, like malls and brick-and-mortar retail, have suffered meaningfully from lockdowns and shelter-in-place restrictions. The standout RE winner from all of this has been single-family housing. Low rates and a desire for more space have spurred on a renaissance in suburban housing demand. This housing resurgence, however, is much different from 2008 as current demand is being fueled by wealthier individuals with high-quality credit scores. 

The chart above highlights the stark difference in new residential construction during COVID-19 versus the financial crisis of 2008. The housing backdrop can be viewed through the lens of good news/bad news. Let’s cover the bad news first. For anyone in the market to buy a home, be prepared for fierce competition as bidding wars are back and prospective buyers are forgoing inspections to gain an edge. The good news? Rising home prices are creating a powerful wealth effect. Consumer confidence, along with the notion that real estate has one of the largest job multiplier effects, could be a powerful near-term tailwind to the economy. 

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