LOS ANGELES — Nathan Long and Lili Chin have struck out so far in their four-month search to find an affordable home in the Los Angeles area — a cold streak that threatens to mess up their anniversary plans.
The housing market has been a pillar of economic strength during the pandemic, but many would-be homeowners, particularly first-timer buyers such as Long and his wife, have met with frustration because of a low number of homes for sale and consistently rising prices.
The couple made a major concession to the virus pandemic in August when they got married via Zoom. They planned to make up for the lack of in-person nuptials by hosting a wedding party at a new home on their one-year anniversary. But so far, the market won’t cooperate.
“We go out and we don’t find many places at all,” said Long, a video-game writer who rents an apartment in the L.A. suburb of Glendale. “I’m not hopeful that we will find anything for a while.”
Homebuyers are facing the most competitive U.S. housing market in decades this spring. To put that in perspective, the inventory of homes for sale nationally fell to a record-low 1.03 million units by the end of February, or about 30% below what it was a year earlier, according to the National Association of Realtors. That amounts to a two-month supply, well short of the six-month supply economists say is needed for a balanced market. Homes in February typically sold within just 20 days of hitting the market.
Meanwhile, the national median sale price of a single-family home climbed nearly 15% to $315,900 in the last three months of 2020, according to the NAR. That works out to about four times the U.S. median family income of $77,774, according to data from the Realtors group. The gap can become a chasm in cities like Los Angeles or Boulder, Colorado, where home prices can be double the national levels.
So, from Los Angeles to Boston, those homes on the market are selling in a heartbeat, often fetching multiple offers well above what the owner is asking. A surge in millennials eager to become homeowners, plus a growing number of people who work remotely and are able to move to more affordable areas, are expected to keep the market running hot.
Homebuyers still have low mortgage rates on their side, providing them with a measure of financial flexibility, though rates have been creeping higher. The average rate on the benchmark 30-year loan moved above the 3% mark early last month for the first time since July 2020. It stood at 3.13% this week, according to mortgage buyer Freddie Mac, though that’s still down from 3.33% a year ago.
“We expect homebuyer demand to remain strong this spring, but it will be tested by higher mortgage rates,” said Danielle Hale, chief economist at Realtor.com.
The ultra-competitive housing market trends are prompting many aspiring homeowners to flee pricey coastal markets for the Midwest and South. For millions of Americans, the pandemic normalized working remotely and that trend helped power U.S. home sales last year to the highest level since 2006, the height of the last housing boom.
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