Housing Shortage Will Make Homes More Expensive this 2017
A growing concern among real estate analysts is that young buyers might be getting shut out of the market as home prices rise to an all-time high in nearly two decades due to a severe shortage in homes available for sale.
In a recent report compiled by the National Association of Realtors, it was found that there is an 89% increase in the median sales price of existing single-family homes in key metropolitan cities in the U.S. in the 4th quarter (as compared to last year's data). The previous quarter before that showed an 87% increase compared to last year's figures. Over half of 178 markets included in the report have reached or surpassed previous sales price peaks in their respective areas.
Lawrence Yun, chief economist of the National Association of Realtors, explains that, "the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”
The Cause: Inventory Shortage
Experts point out that the primary cause of rising home prices is the growing shortage of the housing market inventory-- in the fourth quarter of 2016, there were only 1.65 million homes available for sale, which is 6.3% less than 2015's fourth quarter inventory. It is also the lowest level of available homes for sale since NAR began tracking the supply of available housing since 1999. The new average inventory for the fourth quarter is 3.9 months, down from 2015's 4.6 months for the fourth quarter.
If you would like to read more about how much home prices have increased in a year's time and which cities have been showing severe signs of housing shortage, you may access the original article from which this post was based here.
First-time Buyers, To Buy or Not to Buy?
While home prices are at an all-time high, thereby making home selections lesser for new buyers on a budget, it might not be the wisest to wait for the market to "normalize". The new "normal", based on the trend that analysts have been following in the past few years, is the steady growth of the market, in spite of the shortage in inventory it is currently experiencing. Knowing these factors makes it easy to conclude that home prices will only climb steeper as you wait. And, for those who are willing to wait it out, it might not be worth your while to purchase homes when homes prices do begin falling, as this will only translate to the lose of value of your investment.
If you are uncertain on how to invest in your first home, a consultation with the experts is probably the wisest. They can give you unbiased insight on whether or not you are ready to own a home, and if indeed now is the right time to buy. We can help. Call us at (512) 522-4659 or send us a message. We'd be happy to hear from you.