A sign hangs in front of a home for sale in San Francisco, February 20, 2023.
Justin Sullivan | Getty Images
Even in a housing market that has slowed dramatically due to rising mortgage rates, the supply of homes for sale is about half of what it was in 2019.
The shortage hits some buyers more than others.
The popular 30-year fixed mortgage rate hovered in the high 6% range in May. at this level, Buyers with an annual income of $100,000, slightly above the national average, can purchase a home with a maximum price of about $341,000. But only 39% of homes for sale were listed at or below that price point in May, According to a new report Thursday From Realtor.com with the National Association of Realtors.
In a well-balanced supply-and-demand market, 64% of homes should be affordable to buyers earning $100,000 a year, given the size of that population. As a result, the market is currently short of about 285,000 such listings.
Just five years ago, these income earners could buy two-thirds of their homes for sale. Home prices and mortgage rates were much lower.
The lack of affordable homes fueled competition in the market this spring, reversing the slowdown in home prices that began last summer.
said Noah Herrera, a real estate agent in Las Vegas, during an open house in mid-May. “Over $500,000, slow down a bit.”
In the higher price ranges, many homes are for sale to the number of Americans who can afford them. In fact, for every home offered above $680,000, the market is non-existent Twice as many homes under $341,000.
“Continued high housing costs and a dearth of available homes continue to present budget challenges for many potential buyers, potentially keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve,” said Realtor.com chief economist. Daniel Hill.
The current expensive home market is driving more buyers into new construction, which, ironically, has been coming at a price premium. Homebuilders offer incentives such as promotions or temporary purchases of mortgage rates. However, those are decreasing as builders see more demand and gain more pricing power.
As with everything else in real estate, location is everything. The areas with the largest deficit of affordable homes is El Paso, Texas. Boise, Idaho; Spokane, Washington; Many Florida markets and of course Riverside and Los Angeles California, which are some of the most expensive housing markets in the country.
Areas in the Midwest continue to have the highest number of affordable homes. The four cities with the largest number of affordable homes are located in Ohio. They are followed by Syracuse, New York. Pittsburgh, Pennsylvania and St. Louis, Missouri.
The condition of the display does not seem to be improving. New listings for homes for sale in the first week of June fell 25% year-over-year to the lowest level of any early June on record, according to Redfin.
The lack of new listings has caused the total number of homes on the market to be down 5% compared to the same period last year.