According to realtor.com’s latest monthly housing trend report, home prices in March rose 8 percent year-over-year to $280,000 — surpassing last year’s peak of $275,000. Furthermore, days on market and total listings plummeted by 7 percent and 8 percent year-over-year, respectively.
Realtor.com director of economic research Javier Vivas says the inventory shortage is poised to make the summer buying season hotter than ever as buyers will aim to beat out the competition.
“Our latest inventory data tells us buyers are out in full force this spring. Never in history have there been more eyes on fewer homes than today,” said Vivas in a press release. “At the end of March, we observed price gains that put us on pace for half of the homes listed this summer to be above $300,000.”
“Buyers are not just paying more for the same home; the mix of homes in the market is rapidly changing.”
Vivas also says buyers looking for affordably-priced starter homes will be hardest hit by the inventory shortage, since only one in three homes this summer will be listed under $200,000 — the target listing price for almost half of buyers.
“The injection of new listings above $350,000 remains healthy, but inventory between $200,000 and $350,000 remains anemic and non-existent under $200,000,” he said. “This bodes well for buyers in the upper and luxury tiers, but paints a darker picture for the entry-level market.”
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In CoreLogic’s March HPI report, CoreLogic chief economist Dr. Frank Nothaft said the starter home shortage will disproportionately impact millennials who are already grappling with student loan debt and saving for a down payment.
“Millennials who are looking to become first-time homeowners find it particularly challenging to find an affordable home in these areas,” Nothaft said.
“Our projections continue to show tightness in the entry-level market for the foreseeable future, which could further prevent millennials from purchasing homes in 2018 and 2019, even as much of that generation reaches its prime home-buying years.”
Although jobs and new residential housing starts in Q4 2017 offered some hope for inventory relief, Vivas says that’s not so, as the inventory shortage is showing signs of sticking around in 2018.
“March housing trends show the inventory depletion we’ve seen over the last two buying seasons is carrying over to this year,” he said. “It’s going to be a languid search for buyers this season as they face the harshest, most competitive buying conditions yet.”
“While days on market and total listings are decreasing at a slower rate than before, 36 of the largest 100 markets in the country are still seeing inventory move at least a week faster than this time last year,” Vivas added. “This includes cold weather markets that are thawing faster than expected and quickly catching up to the rest of the country.”
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