The housing market in the US suddenly favors buyers — but not until you hear the catch
Buying a house has become more difficult for young Americans, and home ownership is also getting costly. This is why it isn't surprising that the U.S. housing market is witnessing the largest gap between the number of buyers and sellers in more than a decade, according to a new Redfin analysis. Sellers outnumbered buyers by a record 36.8% margin in the last month. Theoretically, this allows people looking for homes more room to negotiate, but the numbers suggest that things aren't getting better. On the other hand, experts suggest that if the housing market shifts more in favor of buyers, there could be long-term implications for real estate prices and the overall cost of living in the country.
According to the Redfin report, the housing market has changed significantly since 2020. Experts at the brokerage estimate that the last time the housing market turned into a buyer's market was in the years after the 2008 financial crisis, when home prices nosedived across the country. While the numbers paint a good picture for those looking to buy a home, the reality is different. Affordable housing remains out of reach for many Americans. “Of course, it’s only a buyer’s market for those who can afford to buy—many Americans have been priced out of the housing market as affordability has eroded,” Redfin researchers noted in the report.
Cost of homes remains the biggest hurdle for home buyers as 75 of the top 100 housing markets are still considered overvalued as per Cotality. “Here's what's actually happening: we've split into 2markets. All cash buyers? Running the show. Everyone else? Locked out. 1st time buyers hit their lowest share of the market since 1981. The housing market stopped being about shelter a decade ago," Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek.
The analysis from Cotality also suggested that home prices are roughly 50% higher nationally compared to the pre-pandemic era. “Much like the K-shaped trend seen in overall consumer spending, driven largely by higher income groups, lower-income potential homebuyers are facing challenges due to an uncertain job market, sluggish wage growth, and worsening financial conditions. This is leading to weaker demand for homes and downward pressure on prices,” said Selma Hepp, Cotality’s chief economist.
Even real estate firms cite affordability as their biggest challenge in doing business, according to a new report from the National Association of Realtors. “Real estate firms are on the frontlines of the industry and are seeing firsthand how housing affordability and local economic conditions are impacting their clients,” Jessica Lautz, NAR deputy chief economist, said in the report.
While prices remain high, some economists suggest that the market has improved, but growth has come to a standstill. “We’re in a long-term housing standstill. Older homeowners may move down after sitting on massive amounts of equity, which allows them to buy smaller homes outright. The higher end of the market will continue to handle these elevated prices. Everyone else will be pushed out," Kevin Thompson, the CEO of 9i Capital Group, told Newsweek.
According to an analysis by Realtor.com, the rising number of buyers in 11 metro cities overlapped with lower job growth, when correlated with JBREC's data.
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