Its a transient supply and demand factor.

Inventory is very low because many people are afraid to move. Seniors are afraid to move into a condo or assisted living facility. People are avoiding changing jobs that require a move out of state. In reverse, companies are not recruiting/hiring and moving people in. Renters who can not pay are not being evicted and landlords can't sell even if they are behind in their mortgage because of the eviction moratorium. There is such little peer interaction through distance learning that parents in less desirable school clusters are less inclined to move to a better cluster until things resume in person. Sellers don't want to have workmen in their homes to update to sell or people going through their home looking to buy.

Demand is up because people in condos or even townhouses feel unsafe with COVID or are desperate for more space. Demand is also enhanced by the low interest rates. Demand for flipped (even cheaply flipped), fully upgraded or new homes is extremely and unusually high because people don't want to live through in home work during COVID.

When interest go up and taxes go up (which they have to because every state and local municipality has been financially devoted by COVID) buyers will have less buying power. This could very well happen at the same time people start moving again which puts a back log of houses onto the market so inventory will be up.

Duh.

Interest rates and low supply are pushing up prices. People who have been sidelined and/or squeezed for space are willing and eager to stretch for a home, especially if they’ve been hoarding cash and have stable employment. Their pent-up buying power is leading them to fiercely compete for the limited amount of homes, leading to bidding wars. Places in the region that have had flat to modest appreciation over the past 5-10 years (pockets of MoCo, for example) now regularly have sales of homes at 5-30% over list price (see: Kensington and Takoma Park). Not that RE website property estimates are accurate, but many of them show that recent sale prices have a huge gap with estimated values. People are waiving contingencies left and right and I’m sure some buyers are having to come up with thousands when houses don’t appraise for the inflated prices they’re being bought for.

It’s a serious issue here. I’m concerned about post-Covid inflation. I’m also pissed I didn’t buy last year.

Luxury homes pushing prices higher in the U.S.: Redfin
Oct. 09, 2020 3:26 PM ETRedfin Corporation (RDFN)By: Shweta Agarwal, SA News Editor2 Comments
U.S. home prices increased 16% Y/Y for the week ending Oct. 4, according to Redfin (NASDAQ:RDFN).
The median asking price of new listings was up 14% from a year earlier, an uptick from 12.9% during the four weeks ended Sept. 27.
New home listings for sale were up 4% from a year ago; Active listings fell 28% to a new all-time low.
The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to 99.4%,an all-time high, and 1.2% higher than a year earlier.
"Large, expensive, luxury homes are taking up a bigger share of the homes that are selling, which is driving a high growth rate for the median sale price," says Redfin Chief Economist Daryl Fairweather.