Sun Sentinel Palm Beach Edition
Homebuyers frustrated by competitive housing market
LOS ANGELES — Nathan Long and Lili Chin have struck out so far in their four-month search to find an affordable home in the Los Angeles area — a cold streak that threatens to mess up their anniversary plans.
The housing market has been a pillar of economic strength during the pandemic, but many would-be homeowners, particularly first-time buyers such as Long and his wife, have been met with frustration because of a low number of homes for sale and consistently rising prices.
The couple made a major concession to the coronavirus pandemic in August when they got married via Zoom. They planned to make up for the lack of in-person nuptials by hosting a wedding party at a new home on their one-year anniversary. But so far, the market won’t cooperate.
“We go out and we don’t find many places at all,” said Long, a writer who rents an apartment in the suburb of Glendale. “I’m not hopeful that we will find anything for a while.”
Homebuyers are facing the most competitive U.S. housing market in decades this spring. To put that in perspective, the inventory of homes for sale nationally fell to a record-low 1.03 million units by the end of February, or about 30% below what it was a year earlier, according to the National Association of Realtors.
That amounts to a twomonth supply, well short of the six-month supply economists say is needed for a balanced market. Homes in February typically sold within just 20 days of hitting the market.
Meanwhile, the national median sale price of a
single-family home climbed nearly 15% to $315,900 in the last three months of 2020, according to the NAR. That works out to about four times the U.S. median family income of $77,774, according to data from the Realtors group. The gap can become a chasm in cities like Los Angeles or Boulder, Colorado, where home prices can be double the national levels.
So, from Los Angeles to Boston, those homes on the market are selling in a heartbeat, often fetching multiple offers well above what the owner is asking. A surge in millennials eager to become homeowners, plus a growing number of people who work remotely and are able to move to more affordable areas, are expected to keep the market running hot.
Homebuyers still have low mortgage rates on their side, providing them with a measure of financial flexibility, though rates have been creeping higher. The average rate on the benchmark 30-year loan moved above the 3% mark early last month for the first time since July 2020.
The ultracompetitive housing market trends are prompting many aspiring homeowners to flee pricey coastal markets for the Midwest and South. For millions of Americans, the pandemic normalized working remotely and that trend helped power U.S. home sales last year to the highest level since 2006, the height of the last housing boom.
Glenn Kelman, CEO of real estate brokerage Redfin, says the influx of relocating buyers has contributed to soaring home prices in markets such as Tulsa, Oklahoma, and Buffalo, New York.
Mark Wolfe, a brokerowner with Re/Max in the Dallas area, jokes that one in 10 homebuyers there now is from California.
“Dallas is about as Southern as Minneapolis anymore,” he said, noting that the price increases that have resulted from the influx of buyers from other states makes it tougher on local buyers.
His advice to them: Make your search area much wider.