NATIONAL MARKET UPDATE New Home Sales were up 1.6% in December, ending the year up 15.2% from a year ago. Sales in 2020 of new single-family homes were the best in
Income Levels Trailing Behind Home Prices!
Dated: December 16 2020
INCOME LEVELS TRAILING BEHIND HOME PRICES
The number of existing-home sales has dropped in four of the past five months, but not because consumers lack confidence about buying or selling, but because income levels just aren't high enough yet. Although there are many encouraging signs of economic recovery over the past eight to ten years of economic anorexia and job loss. Wage growth is improving at a much slower pace and is unable to keep up with rising home prices. 57% Of households believe the economy is improving and the stock market is at record highs.
Prices in the $100K - $275K price range saw the greatest level of activity where buyers were continually competing with one another. Sellers in this price range often received multiple offers in areas such as Livonia & Westland. Farmington Hills also saw a lot of activity with homes priced up to the low $300,000's. Whereas, central Ann Arbor is an anomaly with buyers paying well over property value.
The continued lack of inventory is pushing prices higher and out of reach of a growing number of home buyers. As home prices rise, 80% of current homeowners say now is a good time to sell—a new survey high. So why are sales fledgling? NAR chief economist Lawrence Yun says some consumers aren’t following through on what they say they’re going to do. “The pace of new-home construction has not meaningfully broken out this year, and not enough homeowners at this point have followed through with their belief that now is a good time to sell,” he says. “As a result, home shoppers have seen limited options, stiff competition, and weakening affordability conditions." Buyer demand is robust this fall, but until more homeowners decide to sell and new construction ramps up, sales across the country will continue to struggle.
Renters who would like to purchase a new home are struggling to save for a down payment due to rising rental rates. About half of renters say they expect to pay more in rent next year. “Rents and home prices have outpaced incomes in the past few years, and this is undoubtedly impacting their ability to put aside savings for a home purchase, even if they increasingly believe it’s a good time to buy,” Yun says. “Heading into next year, higher home prices and limited inventory in the affordable price range will likely continue to hold back a share of renters who would prefer to be homeowners.”
Josh Murray is The Broker Owner of Linked Realty, a firm that specializes in all aspects of Residential Real Estate in Metro Detroit. Josh Murray received Hour Detroit's Top 5% of Realtors in Metro De....