The Sky-High Pandemic Housing Market Finds Gravity Does Exist

This makes it a good time to be a seller — assuming you don’t need to buy. Christopher J. Waller, a governor at the Fed, is living this out.

“I sold my house yesterday in St. Louis to an all-cash buyer, no inspection,” Mr. Waller said in panel discussion on Monday. “But I’m trying to buy a house in D.C., and now I’m on the other side, going: ‘This is insane.’”

He noted that the sharp rise in mortgage rates over recent months should have an effect on what happens with housing.

The recent lack of new building was not for lack of interest. Members of the millennial generation, now in their late 20s to early 40s, are in their prime home buying years. Their desire to buy houses and start families has collided with scant supply, leading to an increase in prices.

Shutdowns in the early months of the pandemic slowed home building, but housing starts have been on an upswing lately. New home completions remain low, however, because the tight labor market and supply chain disruptions have homebuilders scrambling to find wood, dishwashers, garage doors — and workers.

The prices, the lack of supply, the feeling that the only way to win a bidding war is to waive contingencies and inspections: All of this has worn out buyers like Armando Villanueva, a 34-year-old accountant in Whittier, Calif. Looking to trade up from an 800-square-foot two-bedroom house to a larger home for future children, Mr. Villanueva and his wife spent the last few months of 2021 putting in offer after offer — and losing each time. They stretched their budget from $700,000 to $800,000. They removed loan contingencies in hopes of being more competitive. Through two-dozen offers, it still wasn’t enough.

Finally, as the year neared its end, they offered $825,000 on a home listed for $750,000. It went for close to $1 million.