The housing market has been in a frenzy during the pandemic, withas buyers bid higher and higher on a dwindling inventory. Prospective buyers hoping for a break this spring aren't likely to see one, with recent home prices continuing to jump by double-digit percentages.
The median listing price for properties hit a record $392,000 in February, according to a new analysis from Realtor.com. That's an increase of 13% compared with a year earlier, and a jump of almost 27% from February 2020, right before the pandemic hit the U.S., their analysis found.
To be sure, listing prices reflect what sellers hope to convince prospective buyers to pay. Sale prices, however, also hit records in February: The median home last month sold for almost $364,000 — a record, according to real estate company Redfin. That's a 16% gain from a year earlier.
Housing prices have jumped during the pandemic given a confluence of demographic trends, such as millennials moving into their prime home-buying years and current homeowners deciding to stay in place, that is reducing the number of properties for sale. To compete in a market with less inventory and more demand, buyers are bidding up prices by offering over the asking price, as well as makingoffers and even waiving contingencies like home inspections.
Affordability is likely to remain an issue, especially for first-time homebuyers in hot housing markets like Austin, Texas or Las Vegas, Realtor.com senior economist George Ratiu said.
"To see that number at a record high in February is a real signal that the spring season is really starting much earlier," Ratiu said.
"To me," he added, "the real concern — and this is a real challenge, especially for first-time homebuyers — is that today's buyer of a median-priced home, at a 3.89% mortgage, is paying over $300 a month more on their mortgage than they did a year ago."
The spring buying season typically kicks off in March and April, but buyers and sellers may be jumping in earlier this year due to rising mortgage rates, Ratiu said. The reason for this could be that some buyers are seeking to find a home and lock in a rate before they rise again and further push up monthly costs.
A 30-year, fixed-rate loan averaged 3.76% for the week ending March 3, according to Freddie Mac. A year earlier, the average rate was 3.02%.
The biggest price hikes in listings were in southern and western cities, including Miami, where asking prices rose almost 32%, and Las Vegas, where the median listing price jumped almost 40%, Realtor.com's data found.
"First-time buyers in these markets will face challenging conditions," Ratiu noted.
There are only about 250,000 homes currently for sale across the U.S. that are considered affordable for households with between $75,000 and $100,000 in annual income — a sharp decline from the roughly 656,000 homes available prior to the analysis by the National Association of Realtors found.pandemic, a recent
The typical first-time buyer has household income of about $90,000 — but people in expensive markets or towns that are witnessing double-digit price appreciation may find it more difficult to find properties within their budgets.
So far, inventory levels aren't improving in early 2022, adding to the headache of navigating the property market. Active listings, or the number of homes for sale, plunged 24% last month, reaching an all-time low of 456,000 properties, Redfin said.
At the same time, properties are selling fast as buyers compete to capture a home quickly, with 6 in 10 homes under contract receiving an offer within the first two weeks on the market, Redfin added.
"Why this is concerning is [higher home prices] come at a time when inflation is already taking a bigger bite out of most American's monthly paychecks," Ratiu said. "First-time buyers are going to feel a lot of pressure."
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