Why prospective homebuyers need to act fast
Indecisive or procrastinating homebuyers beware: New data show that more than half the homes on the market in May were snapped up in less than a month.
That’s the shortest turn-around time in more than six years, according to the National Association of Realtors, which began tracking that data point in May 2011. That means potential buyers need to act fast when they find a home they like or risk losing out.
The biggest problem is well-established: there’s a growing shortage of homes on the market, driven by a confluence of factors: a steep drop-off in new-home construction; less mobility among older homeowners opting to stay put rather than sell; high employment and low mortgage rates; and a competitive environment that’s driving up prices.
“Those able to close on a home last month are probably feeling both happy and relieved,” said Lawrence Yun, chief economist for the NAR, of the latest numbers. “Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”
How much higher?
The national media home value in May was $199,200, according to Zillow. That’s up 7.4 percent since May 2016. The biggest gain was in Seattle, where median value rose 12.7 percent to $440,100. Dallas was next: values rose 11.2 percent over the past year to $209,200 in the Big D — even as the number of homes on the market rose by more than 8 percent.
But, when it comes to inventory, Dallas is the outlier. Sellers are in the driver’s seat in every region of the country. There were roughly 1.4 million homes for sale in April — 42 percent fewer than the post-recession high of 2.35 million in July 2011, according to Zillow.
The biggest year-over-year declines in available homes were Columbus, Ohio (30.1 percent); San Jose, Calif. (29.2); and Minneapolis (28.7).
The greatest impact of all this falls on younger, first-time homebuyers, who are also dealing with added hurdles like student loan debt and stricter credit standards. It adds up to the lowest homeownership rate in the U.S. in 50 years, according to the NAR.
And, despite a strong job market and low mortgage rates, the situation isn’t likely to improve on its own. A new NAR white paper, “Hurdles to Homeownership: Understanding the Barriers,” projects that without student-debt relief and other policy changes, some 5 million fewer households will be able to afford a median-priced home by 2019.
“The decline and stagnation in the homeownership rate is a trend that’s pointing in the wrong direction,” William E. Brown, NAR president and one of the authors of the white paper, says, “and must be reversed given the many benefits of homeownership to individuals, communities and the nation’s economy.”