Affordable Housing Shortage Is Pricing Out Many Homebuyers

The national shortage of affordable homes for sale caused home sales to decline noticeably in January. The share of first-time homebuyers also fell four percent from one year ago. 

The share of homes priced between $500,000 and $750,000 saw the biggest gains, 12 percent annually, despite the fact that fewer homebuyers are shopping for homes in this range than for more affordable homes. Only 13 percent of buyers are looking at homes for $750,000, whereas 55 percent are shopping for homes priced around $250,000, CNBC reports. Yet, on the heels of the hot spring homebuying season, competition is expected to be strong, per Joe Kirchner, senior economist at Realtor.com.

The lower-price tier is where investors exist. During the recession, when the supply of homes for sale was about four times what it is today, investors bought millions of properties, saving the housing market overall by putting a floor on tumbling home prices. Realtors say now is the time for those same investors to sell. "The price appreciation has been very good, but the future rent growth may not be as bright as what it had been, so if the investors begin to unload, there will be a welcoming trend for the housing market, as we need more inventory," said Lawrence Yun, chief economist at the National Association of Realtors.

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