As Spring arrives across the country, more people are turning their attention to purchasing a home. However, according to the latest figures from Realtor.com, they could be facing an uphill battle, especially if they are first-time home buyers. While statistics show the number of home listings in February increased by 73,000 over this time last year, they also show the median prices for homes rose by seven percent to $294,800. Because of this, affordability may be the biggest obstacle many buyers face in purchasing their dream home.
While these statistics may sound ominous, experienced real estate agents know this just means they will have to work a little harder to come up with referral leads
. As Realtor.com's chief economist Danielle Hale pointed out recently, February marked the fifth consecutive month housing inventories increased, especially in larger markets. Because of this, the National Association of Realtors points out that signed contracts on homes jumped five percent in January and February, leading many to speculate that despite a shortage of affordable housing in many markets, buyers are taking advantage of lower mortgage rates and other incentives to finalize their purchases.
Along with these statistics, many economists also point to various parts of the country experiencing tremendous gains in housing inventory, particularly in the South and on the West Coast. For example, San Jose, CA finds itself with an inventory increase of 125 percent from this time last year, while other cities such as Seattle, Portland, and San Francisco also had gains ranging from 36-85 percent.
To attract buyers to their properties, many sellers are choosing to reduce their asking price rather than let their home be on the market for an extended period of time. This can be good news for real estate agents and brokers, who will likely find themselves with numerous referral leads
from buyers interested in getting a great deal on their dream home. As an example of this trend, 39 of the nation's 50 largest housing markets saw prices slashed in February, a sharp contrast from last year.
However, if there is one trend that bothers economists, it is the growing gap between higher-end properties and those more suitable for first-time buyers. According to the National Association of Realtors, the inventory of homes priced above $750,000 is increasing at a rate of 11 percent per year, while the inventory of homes priced at $200,000 or less is decreasing at a rate of seven percent annually. Yet despite this trend, economists believe that as more and more millennials enter the housing market to purchase first-time homes, this gap will begin to close, enabling more and more buyers to find the home they want at a price they can afford.