House prices in many major economies are rising. This FT series explores whether these increases are sustainable.

Ten years ago, ordinary houses in the leafy state capital of Ohio, Columbus, were listed on the market for nearly 100 days before they were sold. Today, similar properties are sold in just 10 days.

“It has never been like this,” said Michael Jones, a real estate agent at Coldwell Banker Realty with more than 20 years of experience in central Ohio. “This is unprecedented.”

U.S. policymakers are increasingly worried about rising housing prices for homeowners and renters because The world’s widest house price increase It has pushed up the cost of living for at least two decades.

U.S. Housing and Urban Development Secretary Marcia Fudge said at a recent Congressional hearing: “It’s harder to find affordable housing in the United States today than at any time since the 2008 financial crisis.”

According to the latest S&P CoreLogic Case-Shiller index update, nationwide, house prices in May were 16.6% higher than the year before—this is the largest increase in data in more than 30 years, and higher than the 14.8% in April.

“A month ago, I described the April performance as’really extraordinary’ and [now] I find that I don’t have the most advanced things,” said Craig Lazzara, global head of investment strategy for S&P Dow Jones Indices.

Price growth and sales are particularly fast in small cities, suburban enclaves and towns.

Since the beginning of the pandemic, the housing market in Columbus has exploded, as historically low interest rates, remote work, increased demand for larger homes, and relatively limited supply of homes for sale have triggered frantic purchases and sellers by potential home buyers Windfall.

According to data from the real estate website Zillow, the rate of home sales in Columbus is faster than any other major city in the United States. In April, in less than a week, almost three-quarters of Columbus’s properties were signed. Other fast-growing areas include Denver, Colorado and Salt Lake City, Utah.

Fierce competition means that many properties are sold at prices that are much higher than the listed prices, which is beneficial to people with higher incomes or young first-time buyers whose parents are willing to pay the cash needed to win the bidding war.

According to data from the local industry agency Columbus Real Estate Agency, where Jones is the president, the average sales price in Columbus has risen by 15.8% in the past year.

“People say to me,’Don’t you like this market?'” He recently said on the open house of a nearly 6,000-square-foot family home in a residential area east of downtown Columbus, with a listing price of just under $1 million.

“I said,’It’s not special because I represent buyers and sellers’,” he added. “Someone here is a loser.”

Sales in other places are even crazier. According to data from online real estate brokerage Redfin, the median house price in Austin, Texas has risen by 40% year-on-year. Buyers have also flocked to Phoenix, Arizona, where prices have risen by nearly 30% over the same period. In Detroit, Michigan, they grew by 56%.

Suburban enclaves and small towns also benefited. Redfin reported last month that since the beginning of the pandemic, median house prices in “car-dependent” areas in the United States have risen twice as fast as in “accessible” cities-the former has risen by 33%, while the latter has risen by 16%. percentage.

According to an analysis of the U.S. Postal Service mailing address records, among the 30 largest metropolitan areas in the United States, Columbus and St. Louis, Missouri and Tampa, Florida have the largest net increase in the number of arrivals. Commercial real estate and investment company CBRE changes.

Analysis shows that most of the relocations are from the “peripheral area”, that is, only a few hours’ drive from the homeowner’s previous address.

The housing price spiral is also affecting the rental market. According to data from the listing website Apartment List, the national median rent has risen by 11.4% so far this year, more than three times the average increase over the same period in the previous three years.

“The high cost of housing keeps millions of families awake every night,” Fudge warned. “They want to know if they have the ability to put a roof on their heads — and still manage to keep the lights on, pay for prescriptions, and put food on the table.”

Industry experts say that as supply begins to catch up with demand, price growth will slow.

According to the National Association of Realtors, the number of existing home sales in June increased by 1.4% from the previous month. Lawrence Yun, the chief economist of the industry organization, said, “Due to the increase in new housing starts and the listing of existing homeowners for sale, the supply has improved slightly in recent months, all of which have led to an increase in sales.?? “.

Real estate experts and economists surveyed by Zillow predict that price growth will peak this year and then fall back.

“Broadly speaking, due to tight inventory conditions, there is no danger of a fall in house prices, but I do expect house prices to appreciate at a slower rate by the end of the year,” Yun said.

Daryl Fairweather, Redfin’s chief economist, stated that “homes that could have received 20 quotations are now only two or three.”

But she added that although “we have seen demand start to stagnate,” prices have not fallen sharply-indicating that policymakers’ concerns about affordability may persist.

Federal Reserve Chairman Jay Powell recently stated that today’s trends are markedly different from those ten years ago, when the trend was the worst recession since the Great Depression — but he called the housing affordability issue “a major problem”.

“House prices across the country are rising rapidly,” he told a congressional committee last month.

Although he admitted that “this was not driven by the reckless and irresponsible loans that led to the real estate bubble in the last financial crisis”, he warned that it “made it harder for entry-level buyers to enter the housing market, so this Is a problem”.