Home Buyers Have It Tough as Nation Faces Unprecedented Housing Shortage
It's no news to house hunters that the pickings are slim in today's real estate market. While that has been true for several years, the pandemic has made the situation worse as virus-wary home sellers have pulled their properties off the market, resulting in sky-high prices and out-of-control bidding wars for the remaining stock. Overall housing inventory plummeted 43% in January compared with the same month last year, according to a recent realtor.com® report. New listings were down 23% year over year.
Median home prices soared 15.4% annually, to $346,000 in January, as a result of the shortage. That means buyers should gear up for battle—it's going to be a very competitive spring home-buying season. "It's tough for buyers, particularly first-time buyers dealing with limited options and fast-rising prices," says realtor.com® Chief Economist Danielle Hale. "We're looking at an all-time low number of homes for sale and record numbers of buyers trying to get into the market." There were 443,000 fewer homes up for grabs this year than last year, before COVID-19 hit the nation. And while builders have ramped up their pace of putting up new homes, that doesn't seem to have made much of a dent yet. The hope is that once more people get vaccinated against the coronavirus, sellers will feel more comfortable listing their homes.
The threat of catching the virus from a potential buyer walking through and having to move in a pandemic has led many sellers to hold off.
Home prices rose the most in the Northeast, by 16.8%, followed by the West, at 12.3%, the Midwest, at 10.4%, and the South, at 8%.
In the nation's 50 largest metropolitan areas, prices shot up the most in Austin, TX, by 30.2%. It was followed by Rochester, NY, by 25.9%, and Los Angeles, by 22.4%, in January.
"We've seen a lot of companies announce relocations to Austin," says Hale. "It's also benefiting from additional flexibility and remote work. It has a unique culture and this really vibrant tech scene making it an attractive place to live, and it's got a really strong local economy."
The only places to see big surges of inventory were in the two priciest metropolitan areas in the nation: Silicon Valley's San Jose, CA, and San Francisco. The San Francisco Bay Area markets saw 24.8% and 14.4% annual increases in the number of homes for sale in January, respectively. That's likely because many white-collar workers who can now telecommute from anywhere with a good internet connection have sought out cheaper parts of the country.
"Homes still sell very quickly, and it still is a very desirable market," says Hale. "It's an expensive area, and people have the flexibility to work remotely now and may be choosing to move away."
by Clare Trapasso