With the median sales price for existing homes reaching a new high last month, the availability of affordable housing is dwindling, causing a “crisis” in some areas of the country, says Lawrence Yun, chief economist for the National Association of REALTORS®. Higher-priced homes now make up the majority of available inventory—which is the lowest it’s been in decades—making it harder for home buyers to achieve homeownership.
“There is a housing shortage everywhere and a housing crisis in some markets,” Yun says. Here’s how sales in different price ranges fared in May:
- Under $100,000: Down 7 percent year over year
- $100,000-$250,000: Up 2 percent
- $500,000-$1 million: Up 20 percent
- Above $1 million: Up 30 percent
“Because of the run-up in home prices, it’s making it more difficult for renters to convert into homeownership,” Yun says. “We are essentially stuck at a 50-year low in the homeownership rate.”
However, the surge in home prices is working out well for current homeowners, who are enjoying rising equity. In the past five years, home equity has doubled from about $6 trillion to more than $13 trillion. “Yet the renters are not participating in this wealth, so there is a greater divide between owners and nonowners,” Yun says.
The share of existing homes purchased by first-time buyers dropped to 33 percent in May, down a percentage point from April, NAR reports. However, first-time buyers comprise more of the market than a year ago, when they made up 30 percent of sales.
Source: “Divide Widens Between Housing Haves and Have-Nots,” CNBC