Looking for Low-Cost Housing? Be Prepared to Dig Deeper
Just the Facts
- The sub-$250,000 home shortage is growing
- New residential housing projects were down 12.3% in June
- Low existing inventory along with rising labor, land, and material costs are being blamed
- Existing home sales are down 2.2% compared to June 2017 (June 2018 data)
High Demand and Low Supply Drive Price Increases
According to a CNBC report, you may have to dig deeper or be patient if you’re looking to buy a home in the sub-$250,000 class. Sitting in a historic low inventory of existing homes, the demand for new construction is high and that helps drive prices up for both new and existing homes.
Simple supply and demand isn’t the only factor, though. As the country deals with shortages in all trades, the current workforce’s value is rising. Add in rising land and material costs and you have a recipe for higher-priced housing.
[pullquote]…new construction homes that were selling in the $180’s a little more than a year ago are pushing the $200,000 mark.[/pullquote]
Even in our area of Lakeland, new construction homes that were selling in the $180’s a little more than a year ago are pushing the $200,000 mark. A quick look around our city sitting between Tampa and Orlando shows that many of the new development homes now start around the $250,000 mark and go up from there. Many of those tack on additional HOA and other fees on top of your mortgage.
That price point is pushing some potential home buyers out of the market completely, forcing them to decide if they should just stay put.
Is There Any Change on the Horizon?
Unfortunately, there’s no indication that the current trends in inventory and pricing will change soon. No matter which market you’re in, don’t panic yet. You’re still better off saving until you can afford the mortgage payment than getting into something and hoping for a raise at your next performance review.
After all, wise financial decisions now will help you weather the storm of a recession later on if one comes. As the housing market continues to adjust to those changing economic conditions, you’ll be in a position to get in when we shift to a buyer’s market and others are forced to sell.
It’s Not All Negative
There is a silver lining if you’re among the wealthier part of the population, though. Homes in the $1 million range are looking at a slight increase in inventory. While that cuts out many potential homebuyers, it’s good news for those seeking a more luxurious home.