WASHINGTON — Entering the 2014 spring buying season, the U.S. housing market faces an unusual dilemma: Too few people are selling homes. Yet too few buyers can afford the homes that are for sale.
“Both sides of the equation are in a funk,” said Glenn Kelman, CEO of the real estate brokerage Redfin.
A 13.4 percent jump in the average price of a home sold last year, according to the Standard & Poor’s/Case-Shiller 20-city index, hasn’t managed to coax more homeowners to sell. And combined with higher mortgage rates, higher prices have made homes costlier for first-time buyers as well as for all-cash investors.
Average prices nationally are expected to rise by single digits this year. The gains could be strongest in areas with solid job growth, such as Seattle and Austin, Texas. And while construction will put more homes on the market, lack of affordability could keep sales flat to falling.
All of which leaves real estate, much like the rest of the economy, still trudging back to health nearly a half-decade after the recession ended. After last year’s growth spurt, the housing recovery may have begun an awkward adolescence, one prone to fits and starts that can defy predictions.
Here are five vital signs that will shape home sales this spring and the rest of the year.
1. Increase in listings
It’s slim pickings for a lot of would-be buyers. That brutal winter we just got through prevented many East Coasters from listing their homes in recent months. About five months’ worth of homes are on the market, compared with 5.9 months in 2012 and 8.3 months in 2011.
Still, warmer weather, job growth and a strengthening economy are expected to encourage more listings this spring.
“We’re all trying to figure out where the sellers are,” said Kelman. “Everyone seems to be waiting until April or May or June.”
But around the country, many homeowners are still reluctant to sell because they would likely lose money on the deal. The 2007 housing bust still haunts the market.
2. Lack of first-time buyers
After the Great Recession officially ended in mid-2009, many economists predicted that pent-up demand for homes would drive sales in the years to come. Not exactly. Nearly five years into the recovery, buying remains subpar.
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We’re all trying to figure out where the sellers are. Everyone seems to be waiting until April or May or June.”
CEO of the real estate brokerage Redfin