Ignite FB Tracking PixelEven Move-Up Buyers Face Fraught House Hunts - Dave Hiller
Core, Realtors

Even Move-Up Buyers Face Fraught House Hunts

by Dave Hiller 10/17/2019

New Home for Sale

Image by Paul Brennan from Pixabay 

In Tigard, OR in the last 12 months 487 homes were sold. Currently the market has 67 homes for sale and a low inventory of 1.7 months.  Buyers are challenged in finding homes in the market given the small number available along with the condition that the homes are in. Many are in need of remodeling or repair.  For those moving up from a starter home, that generally is at a price point of around $400,000, today only 25 homes are for sale in the market with only 5 homes being above $500,000. Here is more information on what buyers are facing across the country.

 

Low mortgage rates are drawing out more home buyers who want to take advantage of the decrease in borrowing costs, but they’re increasingly growing frustrated as the selection of properties narrows. An unseasonable surge in buyer demand has coincided with housing inventories moving even lower in recent months. Inventories dropped 2.5% annually in September, realtor.com®’s data shows.

The lower tier of the market—homes priced under $200,000—is seeing the greatest shortages, down 10% compared with a year ago. The supply of homes between $200,000 to $750,000, which comprise 60% of the housing market, saw essentially no growth in inventory in September. Economists are now forecasting a decline in the months ahead in that price range.

“If, or better yet, when inventory in this segment begins to take a downturn, the vast majority of home buyers are going to feel its effects as their options rapidly dwindle,” George Raitu, realtor.com®’s senior economist, told CNBC. “September inventory trends, especially in the mid-market, may be the canary in the coal mine that we could be headed for even lower levels of inventory in early 2020.”

As demand grows for homes and shortages remain, buyers should expect to see higher home prices.

Still, lower mortgage rates are getting more buyers looking. The 30-year fixed-rate mortgage averaged around 3.5% in September, well below its average of over 5% last November, Freddie Mac reports. New- and existing-home sales have increased as mortgage rates have fallen, signaling the activity of buyers.

But new-home construction won’t likely be able to pick up enough speed to offer home buyers greater choices at the price points they need. Only 10% of sales of newly built homes come in below $200,000, says Robert Dietz, chief economist at the National Association of Home Builders. Ten years ago, that percentage was 40% of new home sales. Dietz told CNBC that the overall new-housing market is undersupplied by about 1 million housing units.

“We’ve faced what has been called a perfect storm of supply-side challenges,” Dietz says. “There has been an ongoing labor shortage, we lack the necessary land and lots to build homes, we’ve had building material cost concerns, and then probably the most important factor has been higher regulatory costs since the Great Recession.”

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About the Author
Author

Dave Hiller

SRES ®

Graduate, REALTOR ® INSTITUTE

e-PRO ®

PSA

HOWNW.com Certified Specialist

Core, REALTORS®

License No. 201226626

Oregon Licensed Broker 

Hi, I'm Dave Hiller and I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.