The real estate market is still as hot as its ever been. Despite rising interest rates over the past few months, the market continues to set new records. 

Many anecdotes point to it being a simple farce. For example, homes have sold for a million dollars over asking price in San Jose, Washington D.C., and San Francisco.

In Jackson County, Missouri (which holds most of Kansas City), only 0.8 months of inventory was left in March. In other words, for every five homes that sold in March, four remained on the market going into April. For comparison’s sake, a “balanced” market that favors neither buyers nor sellers has six months of inventory.

Overall, prices are up 14% year-over-year and have almost doubled since the trough of the Great Recession. But a few other national stats from Forbes paint an even better picture:

• “Active listings (the number of homes listed for sale at any point during the period) fell 22% from 2020 and 41% from 2019.
• “45% of homes that went under contract had an accepted offer within the first two weeks on the market.
• “32% of homes that went under contract had an accepted offer within one week of hitting the market.
• “43% of homes sold above list price.”

Indeed, the average sales price was 100.5 percent of asking. If you look at home prices from 2000 to the present, even the Great Recession looks like little more than a minor setback:

And while the pace of increases has slowed with rising interest rates, it’s still on an upward trajectory. 

But why is this happening?

The correct answers relate to COVID-19 and the Great Recession itself. But let’s start with what’s not causing the housing boom despite the endless proclamations from various pundits.

Non-Cause #1: Wall Street

Wall Street always makes for a good villain, and they certainly have had their share of scandals. For one, CEO of Gravity Payments, Dan Price, stated that Wall Street firms owned…