Nearly three-quarters of homeowners think that it’s currently a good time to put a property on the market.- Americans are less confident in the economy and their personal financial outlooks than they were in the first quarter.
- Stagnant wage growth and rising home prices continue to erode housing affordability, which may drive more people away from expensive coastal areas.
Nearly three-quarters of homeowners think that it’s currently a good time to put a property on the market.The number of homeowners who think that the time is right to sell is up significantly from one year ago, but that may not necessarily translate to more inventory, the lack of which has some economists worried about an affordability crisis.
The National Association of Realtors’ quarterly Housing Opportunities and Market Experience survey found that 71 percent of homeowners believe that now is good time to sell a property, up from 61 percent in the second quarter of last year. Even so, many potential move-up buyers are holding off listing their homes, which is exacerbating the nation’s supply-and-demand imbalance.
“There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy,” NAR Chief Economist Lawrence Yun said. “As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.”
Stagnant wage growth may be one factor dampening confidence in the U.S. economy. Fifty-four percent of Americans that NAR polled said that the economy is improving, down from a survey high of 62 percent in the first quarter. Similarly, the number of respondents who think they will be better off financially dropped to 57.2 percent, down on both a quarterly an annual basis.
Low housing affordability also concerns Americans, with 42 percent of those surveyed saying that homes are affordable for buyers in all income brackets. In Western states, where homes are more expensive, just 29 percent of respondents think that the average household can afford to purchase a property.
The nation’s affordability problem stems from an all-too-familiar culprit: more willing buyers than homes for sale. NAR’s most recent monthly home sales report says that the number of U.S. homes for sale dropped by 8.4 percent year over year in May, pushing both new and existing home prices to new peaks, a respective $345,800 and $252,800. In the nine-county Bay Area, the median price for a single-family home increased to $818,000, also an all-time high, according to The Mercury News.
Most of those surveyed appear to be aware of the consequences of the nation’s inventory shortage. Fifty-two percent think that home prices in their local communities will keep rising in the next sixth months, up on a quarterly and yearly basis. That anticipated price growth might ultimately force Americans in pricey coastal areas to flee to less expensive parts of the country.
“Paying more in rent each year and seeing home prices outpace their incomes is discouraging, and it’s unfortunately pushing home ownership further away — especially for those living in expensive metro areas on the East and West Coast,” Yun said. “Areas with strong job markets but high home prices risk a migration of middle-class households to other parts of the country if rising housing costs in those areas are not contained through a significant ramp-up in new home construction.”
(Photo: iStock/marekuliasz)