The housing market continues to suffer from low inventory levels moving into the spring season.
Economists claim this is one of the most difficult years to purchase real estate. Zillow claims that shopping season is fierce, with buyers searching for homes for extended periods of time as the housing inventory remained at a three-month low in February.
USA Today reports that millennials looking to buy starter homes are being pushed out of the market, with low housing supplies pushing prices higher. The trend is causing many from bigger cities to relocate.
“Thanks to its relatively cheaper cost of living than Washington, D.C., Baltimore remains a residence of choice for many recent graduates and young professionals looking to buy their first home and start their first career after college,” claims Todd Lubar, 20-year real estate expert.
Lubar, a former top 25 mortgage originator, agrees that the market is heating up.
House hunters are so eager to get into a home that they’re beginning to waive their inspections and purchasing homes sight unseen. Experts predict that reduced affordability and low inventory will lead to flat home sales in spring 2018.
Baltimore’s home prices rose 6.5% in the 12-month period ended February 2018. National home prices rose at a rate of 5.9% to $241,700 for the average home. Wage growth has not kept up with trends and remains near 2.5%.
Las Vegas home prices have risen 12% in the last year and have more than doubled in the past five-year period. Bidders are competing with 15 to 20 others on the same home, leading to many willing to buy the home unseen. Potential buyers are even writing letters to the homeowner to try and increase their chances of a bid being accepted.
The National Association of Home Builders also cites another problem: lower single-family homes being built. Construction worker shortages have led to projects being delayed. Material costs are rising, too, leading to just 900,000 single family homes expected to be built in 2018. The figure is well below the 1.3 million demand for single-family homes.
Buyers of rundown properties or homes needing TLC are purchasing properties, rehabbing them and selling them for $30,000 profit in two months in some cities.
Baby Boomers are also contributing to the lack of affordable housing across the country. Maryland residents are staying in their homes longer and delaying retirement rather than selling. Potential homeowners also fear that after a sharp rise in prices in 2012, buying a home is risky in 2018. A recent poll from February shows that 53% of homeowners think they’ll see another housing crash.
The amount of money first-time owners are devoting to housing costs is also up to 41.2%. A year prior, this figure was at 37% and well above the 30% recommended by experts. The housing market continues to be a race, with many buyers putting more than 20% down on a home and about 25% of buyers willing to bid higher than the asking price for a home.