When looking at the local real estate market, there are several factors at play making buying a home difficult. For both first-time and move-up homebuyers, navigating the real estate market can feel overwhelming, especially with the complexities of pricing and inventory.
Rising home prices and limited inventory are two key challenges that can make homeownership seem out of reach. Michael Woodard with Atlantic Bay Mortgage here in Charlotte NC has provided some insight on what is driving home prices, the current pricing issues, and analyzing the inventory challenges that many buyers face. Each one independently would not be a major issue, but when layering in multiple factors, the compounding effect can be daunting.
Key Issues in the Housing Market
Supply Challenges
- The 2008 financial crisis led to the closure of over 50% of small and mid-sized builders, causing a major supply deficit.
- Between 2010-2020, fewer than 6 million homes were built, compared to 20+ million per decade prior to 2010. It could take 3-5 years for builders to meet demand.
Demographics & Demand
- Millennials, now in their late 30s, are the largest generation since Baby Boomers, driving demand for housing.
- The trend will likely continue for the next 5-6 years as more families enter the market.
Boomers Holding Onto Homes
- Older homeowners are living longer and staying active, reducing the number of homes available for resale. With houses paid off and downsizing offering little financial benefit, many are choosing to stay put.
Is Another Housing Crash Coming?
Five key drivers of the 2008 crash—rapid appreciation, relaxed lending guidelines, poor appraisal standards, ARM loans, and oversupply—are largely absent today.
- Today, the market features stricter lending standards, unbiased appraisals, primarily fixed-rate mortgages, and much lower inventory (600,000-700,000 homes compared to over 2 million in the 2000s).
- Additionally, 40% of U.S. homes are owned outright, with the 60% carrying mortgages holding significant equity, reducing foreclosure risks.
Moving Forward
There are numerous factors at play making the overall landscape to buying a home more difficult than it has in recent years, and this will likely continue for the next 3-5 years. If you’re considering entering the housing market, take the time to research and understand these challenges. Working with a knowledgeable real estate agent and lender from Atlantic Bay Mortgage can guide you through the complexities and help you find the right home within your budget.
