Investors and wealthier shoppers are pricing first-time homebuyers out of the market.
After the 2008 reset of the housing market, prices have recovered, but at a much faster pace than wages. The S&P Dow Jones index that tracks home prices in 20 major cities like San Francisco and Chicago set a record for a fifth straight month in April, the latest month of data available.
That’s because there aren’t enough houses for all the buyers out there, especially at affordable prices.
“The lack of listings in the affordable price range are creating lopsided conditions in many areas where investors and repeat buyers with larger down payments are making up a bulk of the sales activity,” said Lawrence Yun, chief economist at the National Association of Realtors.
With fewer affordable homes available to younger first-time buyers, sales are slowing. The NAR said on Wednesday that pending home sales, which track contracts that have been signed but not closed, fell in May for a third straight month.
“Many prospective first-time buyers can’t catch a break,” Yun said. Prices are going up and there’s intense competition for the homes they’re financially able to purchase.”
Cyndi Lesinski, a realtor based in Los Angeles, said it was typical for homes priced under $US550,000 to get multiple offers and move off the market anywhere from within 24 hours and two weeks.
“We had somebody right away,” Lesinski said about her most recent listing, which was expected to close on Wednesday.
“I listed it as a ‘coming soon’ and we accepted an offer the day that we actually put it in as an active listing.”
But it’s not always the highest offer that closes the deal, Lesinski said. Sometimes it comes down to how well a buyer’s agent is able to negotiate other terms and conditions.
It would be great to see an increase new condo developments in the $US450,000-$US550,000 price range, Lesinksi said, although builders have focused on more expensive housing to get more bang for their buck. But the National Association of Homebuilders, has repeatedly said land and labour shortages limit how much new housing can be added to the market.
So, maybe “we could all move to Ohio to all the towns that are depressed and dying,” Lesinski said. “There’s a lot of empty houses there.”