By Clare Trapasso
Feb 7, 2022
The turbocharged housing market is hurting middle-class homebuyers stymied by a double whammy of fast-rising prices and a dearth of properties for sale.
Since the COVID-19 pandemic began, home prices surged about 30%, according to a joint report from Realtor.com® and the National Association of REALTORS®. The typical home now costs about $80,000 more than it did just two years ago.
Meanwhile, as any buyer knows, there aren’t enough homes on the market. The number of properties currently listed is about a quarter of what was available during the same period in 2007. The shortage has resulted in a runup in prices, offers well over asking price, and bidding wars making it even more challenging, particularly for first-time buyers.
The analysis looked at how affordable homes listed for sale are for prospective buyers with different household incomes. It also looked at the number of homes for sale.
“In a highly competitive real estate market, the best areas for buyers are areas that have relatively more home available. But in order to truly be available, the home has to be for sale and affordable,” says Realtor.com Chief Economist Danielle Hale. “A homebuyer needs to ask themselves: ‘With my income and what’s on the market right now, where do I have the best shot from an availability perspective?’”
Buyers with a household income between $75,000 and $100,000 could afford only about 51% of the homes listed for sale. (Households include all adults living together, such as spouses and partners, extended families, and roommates.) That was compared with 58% in 2019. Those buyers are competing for just 245,300 homes nationally that are within their budgets.
Meanwhile, there were just 165,280 homes across the country that buyers could afford with household incomes between $50,000 and $75,000.
Even in the few places where housing became cheaper during the pandemic—such as the bigger, more expensive cities that became less desirable over the Past few years—the lack of homes for sale has made it harder for buyers to get an edge.
“Due to rising home prices and the ongoing inventory shortage, homeownership attainment will become especially challenging for middle-class buyers unless significantly more entry-level housing units become available,” Nadia Evangelou, NAR’s senior economist and director of forecasting, said in a statement. “Otherwise, the wealth gap between middle-income and upper-income households may grow even further.”
The 10 best metropolitan areas for buyers with household incomes between $75,000 and $100,000 were mostly in the South in less expensive areas that have had more new construction. These places all had more homes for sale at the right price for these buyers.
Deltona, FL, topped the list, followed by Des Moines, IA; Augusta, GA; Atlanta; McAllen, TX; Baton Rouge, LA; Miami; Virginia Beach, VA; Youngstown, OH; and Scranton, PA. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
“Homes are priced a bit lower so that your housing dollars stretch further,” says Hale. Also, “construction has done a better job of keeping up with demand.”
Source- https://www.realtor.com/news/trends/the-middle-class-feels-the-sting-of-the-housing-shortage-and-high-prices/
