Introducing 

Prezi AI.

Your new presentation assistant.

Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.

Loading…
Transcript

Covid-19 and the war it waged on the housing market.

COMM120: Week 7: Final Project

Ashley A. Smith

November 20, 2022

In the spring of 2022,

the housing market hit the

highest it has been in nearly fifteen

years. Although we have seen the

housing market rise this high before, there is

an additional problem that we have never

experienced- the number of existing homes on

the market has reached an all-time low. In 2021, the

percentage of existing homes sold jumped 8.5% from the previous year (The Harvard Gazette, 2022) and it has only continued to rise since then. Between the

increase in the overall housing market

and the decreasing amount of available previously owned homes, the housing market is thriving, and with that comes yet another issue- an increase in

Itroduction: Today's housing market

annual percentage rates (APR) for

home loans. As of November 2022, interest rates took their largest

dip in twenty-one years

(Miller, P, 2022).

Since December 2019, the worldwide

pandemic known as Covid-19 has brought many

hardships to all our lives. The initial panic

quickly turned to an overwhelming fear for your own

life and the lives of your loved ones. Soon after

international borders started to shut down and some places went as far as initiating a total lockdown. On top of the fear of Covid-19 itself, people found themselves isolated, anxiety struck, and feeling as though some of their basic rights had been stripped. Many people reported depression, anxiety, and overall issues with social interaction in conjunction with the pandemic. Between the pain, suffering, and loss Covid-19 has inflicted upon the world, many people are thrilled that life is finally getting back to normal. A lot of people might even

WHO Coronavirus (COVID-19) Dashboard

refer to Covid-19 as a thing of the past. However, the financial aftermath of Covid-19 still lingers

and continues to have detrimental

effects on our lives today.

You may find yourself asking,

"how does the pandemic

play into the housing

market?" Let me tell

you!

Covid-19's impact on the housing market

(World Health Organization, 2022)

Covid-19's direct role

During the Covid-19 pandemic, people needed something to do while in a lockdown state. Many people bought second homes to escape the largely populated cities they lived in, while others made renovations to their current homes. At the same time, there was a halt in the production of building new homes not only because of newly implemented lockdown laws, but contractors also ceased production of new homes because they feared that they may not have buyers. However, that was not the case. When the pandemic started to ease, homebuilders were surprised by the significant demand for new homes. Between people purchasing second homes, the mass quantity of renovations that people performed, and the exceeding demand for new homes, the supply versus demand for building supplies was excessively uneven, especially

when it came to softwood lumber.

Since the start

of the Covid-19 pandemic,

lumber prices have increased by

300% (van Kooten, 2022). There are two

primary reasons for this:

Cease of production:

Supply vs. demand:

During the pandemic,

many mills around the world

were forced to cease production.

There were many issues that arose

from these implemented lockdowns.

The first issue production mills faced was

the ability to re-hire experienced workers after the lockdowns ceased. Many employees found other means of work after the mills conducted their layoffs, resulting in the mills losing a majority of their experienced workers. This

was detrimental to the mills when they ran

into a supply versus demand issue that

no one expected, coming out of the

pandemic.

After the pandemic, the

demand for softwood lumber

had significantly increased. This was

due to the abundance of home

renovations that took place and the demand

for new houses being built. However, with the

stand-still of production for softwood lumber, the supply curve shifted greatly to the left, indicating that the supply was not meeting the demand. Between the lack of qualified employees and the limited resources, the price of lumber reached historical record-breaking prices. Essentially, there was not enough softwood lumber to meet the purchasing needs of the consumers and the mills were not able to make it fast enough to meet

those demands. At this point, softwood

lumber became a valued necessity

that was limited, resulting in a price

increase the world was not

prepared for.

Production of softwood lumber

Mountain Pine Beetle

(Invasive Species Center, n.d.)

Canada accounts for the largest

importation means of softwood lumber

into the United States (U.S.). The pandemic

affected Canada, just as it did the U.S. With a

limited number of employees, not only were

Canada's mills under-employed, but they also had

to layoff many transport drivers that would normally

haul lumber into the U.S. Being as the U.S. was behind on their own production of softwood lumber, the decrease of importation throughout the pandemic made things worse. Additionally, Canada implements restrictions on how much lumber can be exported each year due to an ongoing epidimic with the Mountain

Pine Beetle, which has attacked half the total

volume of commercial lodgepole pine since the

1990s (McDaniel, V., 2022). With these restrictions

in place, Canada cannot compensate for the

lack of lumber exported during the

pandemic, resulting in a further

loss for the supply of softwood

lumber in the U.S.

Importing issues

Mountain Pine Beetle

(Invasive Species Center, n.d.)

Now for the question everyone has been

asking: When will the housing market drop?

It's followed with the sad reality, which is nobody

knows. In February, Zillow, the online real estate sales

platform, revised its 2022 forecast upward, predicting home

prices will surge 16 percent nationwide (Pazzanese, C., 2022).

There have been little to no indicators that the housing market is returning to what it was pre-pandemic. If anything, interest rates

are continuing to rise, indicating that there is still a larger demand

than supply or resources to build (softwood lumber). The Harvard Gazette interviewed Nori Gerardo Lietz, a teacher of real estate

private equity at Harvard Business School, and she stated that one of the things that need to change for the housing market to even out is

the building restrictions in cities. These restrictions indicate how

high or how close building structures can be in a specific area. Lietz argues that until more properties are allowed to be built in these

limited zones, there will continue to be a supply versus demand

issue.

When is the housing market projected to decrease?

Until we start to see increased production of lumber to

back-fill the demand and lower interest rates on home

loans, there will be no indications as to when the

housing market will lower.

The pandemic known as

Covid-19 has affected of our lives

in one way or another. Whether it resulted in

the loss of a loved one, issues with your own health,

or the future implications it has brought with it. Most

people think that life has returned to normal,when in

reality, there is still a long way to go. The housing

market is a prime example of this. Until we can figure out how to undo nearly two and a half years of damage, it will

continue to have a negative effect on people's lives in more or less, subtle ways. For example, you would not necessarily notice the issue with the housing market unless you

planned on purchasing or renovating a home. However,

the same issue that the housing market is facing, many other big industries are also struggling with. At one

point or another, you will likely experience the

financial aftershock of Covid-19.

So, let me ask you, is Covid-19 really a

thing of the past?

Conclusion

References:

Miller, P. (2020, October 7). 30-year mortgage rates chart. The Mortgage Reports. https://themortgagereports.com/61853/30-year-mortgage-rates-chart

Miller, P. (2020, October 7). Current 30 Year Morgage Rates-2022. Chart (slide 2). https://themortgagereports.com/61853/30-year-mortgage-rates-chart

Mountain Pine Beetle - Profile. (n.d.). Mountain Pine Beetle. Pictures (Slide 6) https://www.invasivespeciescentre.ca/invasive-species/meet-the-species/invasive-insects/mountain-pine-beetle/

(n.d). Prezi photo (slide 4). https://prezi.com/p/edit/jxfnivdwkhys/

US housing starts february and softwood lumber prices march:

2022. (2022, Mar 18). PR Newswire http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fus-housing-starts-february-softwood-lumber-prices%2Fdocview%2F2640239941%2Fse-2%3Faccountid%3D8289

van Kooten, G. C., & Schmitz, A. (2022). COVID-19 impacts on U.S. lumber markets. Forest Policy and Economics, 135, 102665–102665. https://doi.org/10.1016/j.forpol.2021.102665

Virginia McDaniel (2022, May 13). How the pandemic drove up the cost of wood products. US Forest Service. https://www.fs.usda.gov/features/how-pandemic-drove-cost-wood-products#:~:text=During%20the%20first%20year%20of,%2412.80%20to%20%2448.00%20per%20sheet).

“Who Coronavirus (COVID-19) WHO- Coronavirus (Covid-19) Dashboard .Chart. 2022 (slide 3), https://covid19.who.int/.

Writer, C. P. H. S. (2022, February 9). When will rocketing housing prices ease? Harvard Gazette. https://news.harvard.edu/gazette/story/2022/02/when-will-rocketing-housing-prices-ease/

References

Learn more about creating dynamic, engaging presentations with Prezi