It’s going to be a tough market for home buyers this season.
The nationwide shortage of inventory is persisting, making it difficult for buyers, especially first time home buyers, to find homes. On top of that, the rising prices and mortgage rates are making it hard for buyers to find homes within their budget range.
The combination of high demand and low inventory is seeing homes sell an average of eight days faster than last year. And this is not only a problem in metropolitan areas; buyers in smaller cities with less competitive markets are still having a hard time finding homes.
Areas that are seeing a lot of job growth will have a hard time accommodating the influx of younger families who don’t yet have the capital to afford the higher priced homes. It’s a borderline crisis not being able to house incoming workers, which will definitely lower the appeal of moving to some cities.
There is another factor that is worsening the tough market, the mismatch between demand type and inventory type. For example in Minneapolis, there is a relative glut of luxury homes, which account for only 40% of searches but 58% of the inventory. This building trend towards high end luxury homes on the development side is creating a rift between supply and demand for starter homes.
With rising prices, rising mortgage rates, and dwindling inventory – buckle down buyers for a tough home buying season this year.
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