TAMPA, Fla. (WFLA) — High home prices and low inventory for sale remain the biggest stresses on the current American housing market. According to the National Association of Realtors, it was a problem before the COVID-19 pandemic, but only worsened over its course.
The rising prices and lack of available places to live have resulted in an affordability problem, according to the realty organization.
“Two in three renters cannot afford to buy a home; one in two renters pay more than 30 percent of their income for rent due to rising rental costs,” NAR reported. “Home prices continue to rise to record highs, eroding affordability even further. Since 2019, home prices rose nearly 30 percent. As a result, a typical home is about $80,000 more expensive than pre-pandemic.”
NAR reported that home inventory has also “dropped significantly.” They said the inventory reached record lows in 2021, exacerbating a housing shortage that was already problematic before the pandemic. “There are currently only around one million units available for sale” in the U.S., NAR said. In 2007, there were four million.
In an inventory of the June housing market by Realtor.com, the company reported the inventories are starting to increase. Active listings increased 18.7% in the past year, according to Realtor.com, but the number of unsold homes was still high.
Compared to June 2020, at the start of the pandemic, active listings were down 34.1%. From June 2019, the year before COVID rocked the markets, listings were down 53.2%, according to the Realtor.com data.
Prices have been on the rise for months, if not years since the start of the pandemic. To combat inflation, the Federal Reserve has increased interest rates multiple times in the past few months. Doing so has increased mortgage rates to a current level of 5.7%. Rental prices are also rising, though higher in some cities than others.
In addition to Tampa’s higher rent prices and low inventory, the area’s home prices are also up higher than most of the country. While inventories across the U.S. rose, Tampa’s inventory fell. Since last year, Tampa home inventories dropped almost 2%. Zillow inventory data showed there were 20% fewer listings in the past year, and that while more inventory may be encouraging to buyers, “there are still fewer listings” than in May 2019.
At the same time, Zillow reported home prices were up 36.5% year-over-year in Tampa. In 2020, prices only rose 17.6%, according to Zillow.
Separately, Realtor.com reported “The total number of unsold homes nationwide—a metric that includes active listings and listings in various stages of the selling process that are not yet sold—was still down 1.4% percent from June 2021. However this has improved from last month’s 3.9% decline.” The company said fewer buyers may help with issues of competition, potentially able to “provide some relief.”
The organization reported that historically low inventory made fewer people able to afford a home, while the number of listings per household searching for a home has gone down.
NAR described the change as “a stark decrease in availability.” According to the NAR analysis, there used to be one listing per 24 households looking for a home. Now, the current inventory level makes it 65 households per listing, leading to increased competition.
“Nationwide, housing affordability declined compared to pre-pandemic conditions. Although mortgage rates are still lower than in 2019, home prices are more than 30% higher now,” NAR reported. With wages up 12% compared to 2019, “A household earning $75,000 to $100,000 can currently afford to buy 51% of the active housing inventory. Nevertheless, that same household could afford to buy 58% of the homes for sale in 2019.”
