Home buyers looking at homes for sale

The housing shortage is affecting some people and areas harder than others

In today's real estate market, an unexpected issue has emerged, one that is directly affecting a large segment of potential homebuyers. Despite a noticeable slowdown due to increasing mortgage rates, there's an undeniable shortage in the supply of homes for sale, a sharp contrast to the state of the market in 2019.

This housing shortage is affecting some segments more than others. In particular, homebuyers with an annual income around $100,000, slightly above the national average, are feeling the squeeze. Back in May, when the 30-year fixed mortgage rate was lingering in the high-6% range, these individuals could only afford houses priced around $341,000. Unfortunately, only 39% of houses listed that month met this price point. This data, according to a report by Realtor.com and the National Association of Realtors, highlights the imbalance in the market.

In a balanced real estate market, 64% of listed homes should be affordable for this income bracket. This means there is a staggering deficiency of about 285,000 listings suitable for these buyers. Only five years ago, the same income group had access to two-thirds of the homes on the market, primarily due to more affordable home prices and lower mortgage rates.

Lack of Affordable Homes

This lack of affordable homes has intensified competition, leading to a rapid increase in house prices this spring, overturning the previous downtrend in prices. Real estate agent Noah Herrera explains this disparity: “Homes under $500,000 are selling incredibly fast, with multiple offers for those under $350,000 and $400,000. But once we look at houses over $500,000, the pace slows.”

Adding to the challenge, there's a surplus of homes in the higher price bracket, while the market lacks a proportional supply of affordable homes. Danielle Hale, chief economist at Realtor.com, points out, “High housing costs and the scarcity of available homes pose significant budget challenges for many prospective buyers, potentially keeping them in the rental market or delaying their purchase.”

Interestingly, the pricey existing home market is nudging more buyers towards new construction, which previously came with a price premium. Homebuilders are responding by offering incentives such as upgrades or temporary mortgage rate buydowns. But, as demand increases, these incentives are dwindling.

The Least Affordable Housing Markets

Naturally, in real estate, location plays a huge role. Cities with the largest deficit of affordable homes include El Paso, Texas; Boise, Idaho; Spokane, Washington; several Florida markets; Riverside and Los Angeles, California. On the flip side, Midwestern cities continue to offer a higher number of affordable homes. Top on the list are four Ohio cities, followed by Syracuse, New York; Pittsburgh, Pennsylvania; and St. Louis, Missouri.

Despite the challenges, the situation doesn't seem to be improving. New listings of homes for sale fell by 25% YoY in the first week of June, hitting a new low for this period. This scarcity in new listings has pushed down the total number of homes on the market by 5% compared to the same period last year.

Our Real Estate Agents Can Help

The ongoing shortage of affordable homes underscores the necessity for potential buyers to stay informed and adaptable. Understanding the trends and challenges of the current real estate market is a crucial first step towards securing your dream home.

Navigating the current real estate market can feel like a daunting task, especially when dealing with shifting trends and unique challenges. Our team of experienced real estate professionals is ready to provide you with personalized insights and strategies to help you secure the right home at the right price.

Don't let market complexities prevent you from achieving your homeownership dreams. For more information, advice, or assistance in your home buying journey, please don't hesitate to contact us using the form below or emailing info@pearlantonacci.com. We're here to support you every step of the way. 

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Posted by Brian Pearl on


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