When the pandemic first started to pick up speed, the economy rapidly dropped. Many people feared a repeat of the 2008 recession, where dropping housing prices had disastrous results. However, things do not seem to be going as badly as people feared. Instead, the housing market has actually been performing very well lately. According to Ali Wolf, the chief economist of Meyers Research, "The housing recovery has been nothing short of remarkable." Why are real estate prices soaring? There's a few key reasons that are causing the housing market to boom.

People Are Rethinking Housing Needs

It is true that many people are struggling financially during the COVID pandemic. Though unemployment is at record highs right now, the majority of Americans still have a job. Those most affected by the coronavirus tend to be part time and minimum wage workers, who typically rent instead of owning anyways. This means that many white collar workers are still financially stable enough to purchase homes. For this demographic, the virus has actually increased their desire to buy a home.

After months of shut down orders, many people are starting to realize their current home does not fit their needs. Some people are wanting more space for family members, while others are starting to realize they would like a larger yard. As company's move towards remote work, many city dwellers are also starting to rethink their location.

People are spending more and more time at home, so they are realizing the importance of loving their house more than ever. Spending all this time at home has also increased buyer demand by helping them save money. People who are no longer spending money on vacations and going out to restaurants are realizing they may be able to afford a new house after all.

Record Low Mortgage Rates

Mortgage rates are often linked more closely to the overall economy instead of the housing market itself. This is good news for interested buyers because it means mortgage rates are unusually low at the moment. The president of the National Association of Mortgage Brokers reports, "I'll never see a rate this low again."

Right now, the average mortgage rate is 3.03 percent, which is the lowest rate ever recorded. This drop in interest rate percentages translates into huge savings. If you can lock in a mortgage right now, you can end up paying hundreds less on your mortgage payment each month. Over the history of your loan, you may end up saving tens of thousands of dollars.

These lower mortgage rates are incredibly tempting for buyers. In many areas, it is actually cheaper to buy instead of rent right now. As buyers rush to lock in these rates, they are creating more demand for houses, which drives prices up.

Less Homes Are Being Listed Right Now

Increased demand for housing generally leads to a boosted housing market, but things get really interesting when a high demand is combined with a low supply. Right now, this seems to be a huge contributing factor to the housing market's recovery. Right now, there are 31 percent less home listings available.

Due to economic uncertainty, many homeowners are thinking about holding on to their current properties instead of selling them. Furthermore, those worried about catching the virus do not like the idea of putting their home on the market and having a lot of people wandering through the property. There is also a decline in new constructions, as investors are putting their future plans on hold. Due to government assistance, there is not likely to be a flood of foreclosures any time soon either.

With the decline in properties, all the interested buyers are having to compete to get their dream home. In many cities, this is leading to bidding wars and higher prices. Buyers are snapping up homes quickly, so indecisive buyers may miss out on properties they were considering.

With a lot of interested buyers, low mortgage rates, and decreased inventory, prices are remaining impressively high in the housing market. This is good news for homeowners concerned about dropping values, but it does mean buyers should not expect to make any bargain purchases any time soon.