Whether you’re buying or selling, or if you own or rent, you’ll want to know these 6 things about today’s housing market.
- There’s not enough new construction. The current shortage, and slow rate, of new construction, is leading to an increase in prices. Read more from Harvard’s annual State of the Nation’s Housing report.
- Homeownership is on the rise, hitting 64.4% of U.S. households in 2018. The rate rose 0.5% from the previous year, resulting in an additional 1.6 million households.
- Houses are bigger—and less affordable. Many first-time home buyers are looking for smaller, more affordable single-family houses. But builders aren’t putting them up. That’s because it’s more profitable to put up bigger for higher prices. Just 22% of single-family homes clocked in at under 1,800 square feet, according to the report. That’s compared with 32% from the previous decade.
- Rent is more expensive. Increasing rents, going up 3.6% annually in 2018 and 3.8% in 2017 are driving people to homeownership. Homeowners have more of a fixed cost as they know what their monthly mortgage will be year over year. Additionally, renters are paying more of their income toward housing than homeowners.
- Home price growth is slowing. Prices aren’t coming down—they’re just not increasing at such a fast pace. Over the last 5 years home values have far outpaced rises in income. The deceleration will keep the market sustainable. That said, the median home list price is $310,000, according to realtor.com.
- Buyer’s market conditions are expected to make a strong comeback in 2020. This means that the local supply of homes for sale will exceed the demand from buyers within the same area. In a buyers market, homes listed for sale tend stay on the market longer. Price reductions are more common. And sellers are generally more motivated to land an offer.
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