It's a fact - every would-be buyer out there knows there simply aren't enough homes for sale these days to appease the hordes of competition. But despite the shortages, rising prices, and bidding wars, more homes are expected to be sold this year than in more than a decade.
According to Chief Economist Lawrence Yun - "The combination of the stock market being at record highs, new jobs creation, pent-up household formation, and rising consumer confidence are giving more households the assurance and ability to purchase a home. However, prices are rising too fast in many areas and are outpacing incomes."
As a result, buyers are compromising on the number of rooms, length of a commute, or other home qualities. Meanwhile, builders are mostly building for the mid- to upper-price range. This mismatch in supply and demand is making affordability more acute for those with modest incomes.
In some markets along the coasts, prices are rising by double digits due to the scarcity of homes.Thus, many current homeowners who might be interested in trading up are hold off, as those homes are simply out of their price range.
With strong demand and lack of supply, bidding wars have gotten so bad in some markets that buyers are driving up prices 30% over asking in some cases.
Buyers are now putting ever-higher percentages of their incomes toward homeownership, spending up to half of their take home pay on housing giving up luxuries such as eating out, new clothing and annual vacations.
Meanwhile, others purchase homes farther from the city, settle for smaller homes or even purchase residences in need of some work. Concluding - Buyers may have to lower their expectations even when utilizing their disposable income.
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