Consumers are increasingly on the house hunt this spring. Though they’re enjoying solid employment and paycheck gains and in a rush to beat rising mortgage rates, they’re also struggling to find a home to buy in many housing markets.
Read more: New Reality? Buyers Face Fewer Choices
Indeed, the supply of homes for-sale is at a nearly 20-year low. The most affordable homes—those that tend to attract first-time buyers—are in short supply too. Meanwhile, home prices are rising sharply as buyers find themselves competing for the few homes that are for sale.
Reports are growing of bidding wars erupting across hot markets. For example, seller Kathleen Mulcahy in Seattle says her one-bedroom, one-bath condo received 21 offers—all above the $398,000 asking price—within one week of listing. She ultimately accepted a $500,000 all-cash offer. But now Mulcahy says she’s forced to put off buying another home because of the scant inventory and the escalating prices.
About 1.75 million homes were for-sale nationally at the end of February, down 6.4 percent from a year earlier, according to the National Association of REALTORS®. The supply of homes has dropped on an annual basis for the last 21 months.
Why is the supply so low? Housing experts point to several reasons. The average time that owners are staying in their homes before selling has doubled to nearly eight years, according to ATTOM Data Solutions. Investors own a larger portion of houses and they’ve been renting them out. Between 2006 and 2016, the share of single-family houses and condos owned by investors averaged around 30 percent. Also, builders–faced with rising land costs and a shortage or skilled workers–have done little to ramp up new-home supplies.
The shortages are prompting home prices to skyrocket. The median sales price jumped 7.7 percent from a year ago to $228,400—more than double the pace of average pay gains.
Source: “Mission Nearly Impossible This Spring: Finding a Home to Buy,” The Associated Press (April 10, 2017)
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