First-time buyers are probably about a month away from forming their own support group as, not only are things not getting better for them in their pursuit to become homeowners, but they are actually getting worse.
As realtor.com reports, 75 percent of U.S. counties with a population larger than 100,000 people are less affordable now than a year ago. And that’s not all; home prices have outpaced wage growth in 94 percent of those counties in each of those locations, as well. Even the housing markets typically thought of as stable and affordable are feeling the pain.
Take the Dallas metro area, for example. Long thought of as one of the most stable and consistently affordable major markets in the United States, the Dallas area has seen its home prices grow at one of the fastest rates in the country since 2014 and its housing inventory has dropped under a two months’ supply, which is as low as it has been in a quarter-century. In January, Dallas hit 13 months in a row with year-to-year price gains above 8 percent. The national average for that time period was about 4.7 percent.
It really has become the perfect storm for home value appreciation as mortgage rates are near historic lows, unemployment is at its lowest levels in eight years, and housing inventories continue to shrink, meaning across the country housing markets are becoming less affordable compared with historical norms, especially on the lower end of the spectrum. Affordability issues are one of the main reasons why first-time homebuyers accounted for just one third of home purchases in 2015, the lowest level in almost 30 years.
People who may be looking to put their starter-homes on the market and move up to a larger house are unable to do so because, while they could sell their current home almost instantly, they would be left with nowhere to go. Many people in this situation are instead deciding to make additions to their current homes as opposed to try and buy a new home. It may be a plan that works well for them, but it is further decreasing the amount of entry-level homes on the market.
While areas like Dallas and Denver are facing extremely short supplies, some cities, such as Las Vegas, are faring better. Las Vegas has a six months’ supply, considered to be stable.