Gap Widens Between What Buyers Want, What’s for Sale
June 28, 2019
Home buyers are finding fewer homes for sale that are meeting their price expectations. Half of all home buyers say they’re looking for a home priced under $288,000. But that is 9.1% below—or $27,000 less--than the median list price of currently available homes, a new realtor.com® study finds.
“The price difference between what buyers are searching for, closing on, and what’s available on the market demonstrates just how big the gap is for entry-level home buyers,” says Danielle Hale, realtor.com®’s chief economist. “Buying a first home has always been a challenge, but with such a slim number of entry-level homes available, it’s especially difficult now.”
The median sales price of homes purchased in April was $267,000, which is about 15% or $48,000 less than the price of the inventory currently on the market, according to National Association of REALTORS® data.
Realtor.com® researchers estimate that about 94,000 more homes priced between $100,000 to $340,000—or a 15% increase—are needed to satisfy the imbalance between what buyers want and what is available. However, it’s homes priced above $750,000 that have seen the most growth in inventory lately, rather than the lower end of the market, researchers note.
“Entry-level homes continue to be difficult to come by as the inventory composition shifts more and more toward higher-priced homes,” Hale says. “This is causing smaller and more affordable homes to appreciate rapidly, resulting in a mismatch between what buyers are able to spend and what sellers expect to receive.”
Smaller homes (those between 750 to 1,750 square feet) have appreciated 12.1%, or 3.5 times, faster than mid- to large-sized homes (3,000 to 6,000 square feet), realtor.com®’s analysis finds.
Where Buyers Are Having it Easiest, Most Difficult
Buyers are finding the smallest imbalance in their search for homes for sale in a few select markets. For example, realtor.com®’s analysis found that the markets where buyers are most likely to find what they want is Buffalo, N.Y., which has a median list price of $194,950, followed by Memphis, Tenn. ($219,950); Baltimore ($329,050); Pittsburgh ($189,950); and Philadelphia ($279,950).
On the other hand, the metros with the largest price imbalances are Cincinnati (which has a median list price of $275,045), followed by Houston ($324,950), Minneapolis ($370,050), Indianapolis ($284,950), and Atlanta ($339,050).
Updated: October 23, 2019