Vicious cycle creates “huge supply crunch,” pushing home prices up

Availability at record low as homeowners stick around

National /
Jan.January 22, 2021 09:10 AM
The median existing-home price exceeded $300,000 for the first time last year (iStock)

The median existing-home price exceeded $300,000 for the first time last year (iStock)

Homeowners aren’t budging, and it’s driving the supply of houses down — and existing-home prices up.

One in four homeowners has not moved in 20 years, the Wall Street Journal reported. The analysis, conducted by real estate brokerage Redfin, found that homeowner tenure has been climbing steadily since 2005, when only 8.6 percent of homeowners had been in their homes for 20 years.

Home sales in 2020 swelled to their highest level in 14 years as newly remote workers searched for more space for their families and home offices. In turn, the availability of homes has dwindled to a record low, with just a 2.3-month supply at the end of November.

Those looking to buy homes will find few affordable options, as the demand for existing homes pushes prices up. The median existing-home price exceeded $300,000 for the first time last year, and in November reached $310,800 — a 15 percent increase from 2019, according to the National Association of Realtors.

“We are in a really huge supply crunch,” Daryl Fairweather, Redfin’s chief economist, told the Journal. “It becomes a cycle where people don’t want to move because it’s so difficult to buy a home, and then that in turn makes it even more difficult to buy a home because people aren’t moving and freeing up inventory.”

[WSJ] — Georgia Kromrei





    Related Articles

    arrow_forward_ios
    Home sales were the busiest January on record, but still the fifth month of decline in a row. (iStock)
    Pending home sales fall for fifth consecutive month
    Pending home sales fall for fifth consecutive month
    Glenn Kelman (Randy Stewart via Flickr)
    Redfin revenue grows as it races to hire more agents
    Redfin revenue grows as it races to hire more agents
    (Getty)
    Nearly half of home sellers overpaid their broker fees in 2020
    Nearly half of home sellers overpaid their broker fees in 2020
    CBRE CEO Bob Sulentic. (CBRE, Getty)
    CBRE’s 2020 earnings down 8%
    CBRE’s 2020 earnings down 8%
    January is the second consecutive month of increase in new home sales. (Getty)
    Sales of new homes up 4.3% in January
    Sales of new homes up 4.3% in January
    (iStock/Illustration by Alexis Manrodt for The Real Deal)
    US home prices are more than 5% too high: Fitch
    US home prices are more than 5% too high: Fitch
    The Texas snow storm was partly responsible for the decline in mortgage applications. (Getty)
    Texas storm, increasing rates freeze home mortgage market
    Texas storm, increasing rates freeze home mortgage market
    (iStock)
    US home prices jump 10.4% in best year since 2013
    US home prices jump 10.4% in best year since 2013
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...