Derek Fleck and his fiancée Hayley Atwater were living in a studio apartment in Santa Monica, neighboring Los Angeles, when the city went into lockdown in March of last year. They were both forced to work from home and quickly found they didn't have enough space. Fortunately, their combined income - with Fleck working at a company that provides healthy food products and Atwater's job as a data analytics manager - gave them the means to upgrade. They bought a two-bedroom condo in the Playa del Rey neighborhood for around $750,000.
"Interest rates keep going down right now, so we thought it was an attractive time to buy," says Fleck. "We'll probably live here for three or five years, and then maybe move out. Hopefully, the prices will go up."
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That's exactly what some economists fear. The median price for a home in the US has shot up by 13% since before the pandemic, according to real-estate firm Redfin.
The effects of the housing boom are particularly stark in Los Angeles. People like Fleck and Atwater are taking advantage of the market, while others are struggling to make rent, and face risks of eviction and homelessness.
The Bay Area in northern California is facing a similar problem. But a potential solution could be on the way from an unlikely source. Google and Facebook, two of the tech giants that have long been singled out as reasons for rising rents in the area, are investing in Factory OS, a startup that builds affordable modular homes. Separately, Google has said it will allocate 20% of new residential units at future camps in northern Mountain View, south of San Francisco, to affordable housing.
But despite these efforts, home buying will always be an attractive option for those who can afford it. And according to Rick Palacios, Jr., an analyst with John Burns Real Estate Consulting, this means prices may continue to rise.
"The housing market is super strong right now," he says. "We've got incredibly low, historically low mortgage rates. But when you factor in what's happened with Covid and work from home, it's really unshackled millions of households to where they now no longer need to be living close to where they're working."
