The Housing Shortage Is Highest in These Cities
NEW YORK ( MainStreet) Douglas Elliman Realtor Elaine Richheimer has noticed that the South Shore of Long Island is buzzing with real estate activity despite continuing efforts to recover from the water damage of November 2012's Super Storm Sandy. In fact, home sales have increased 48.5% in the region stretching from Queens to the Hamptons.
"Although sales of waterfront properties are quieter, pricing is attractive and, as a result, living in a house on the water overlooking the South Shore is more obtainable now," Richheimer told MainStreet.
Richheimer's optimistic glow on home sales in New York reflects an estimated 56% of real estate agents who say now is a good time to buy compared to 55% in the fourth quarter of 2013, according to Redfin data.
While 71% of current homeowners are contemplating selling in 2014, according to a Lending Tree survey, buyers continue to be frustrated by housing shortages with 87% of Redfin realtors citing limited inventory as the biggest challenge for buyers.
"The housing crash lead new home construction to fall off dramatically, restricting the number of homes available for sale," said Ellen Haberle, economist with Redfin, a national real estate brokerage. "New home construction has increased slowly over the past two years, but factors such as a lack of developed lots and skilled labor, expensive materials and tight credit conditions have challenged builders' ability to boost construction quickly."
Cities with the biggest drop in homes for sale over the last year are Denver, Las Vegas, Boston, Chicago and Portland, according to Redfin's Price Tracker Report. Markets seeing an increase in housing inventory include Sacramento, Phoenix and Ventura, Calif.
"These days finding the right home is more difficult than ever," said Marcus Fleming, a real estate agent with Redfin in Phoenix. "With such limited home inventory available, buyers who need to move now often have to compromise on upgrades or location to find a home that meets their budget and basic needs."
Lending Tree data further found that 90% of younger homeowners under 30 will drive potential home sales.
"Most U.S. housing markets are experiencing a recovery, because the economy is continuing to grow, unemployment rates have improved and home values are increasing, making the American Dream more accessible in the past year," said Doug Lebda, founder and CEO of LendingTree.
Currently, average 30-year fixed mortgage rates are 4.39% compared to 6.7% since 1990. However, 60% of current and potential home buyers anticipate a moderate uptick in mortgage rates and 14% expect rates to be considerably higher 12 months from now.
"The expectation of higher rates doesn't seem to have a substantial impact on housing activity," Lebda told MainStreet.
About 39% of agents believe that mortgage rates exceeding 5.5% would harm home sales and price growth. At the same time, one-third of agents believe rates would have to reach 6% to have that effect.