- Nationwide, the median sale price for existing single-family homes grew 6.2 percent year-over-year
- Q2 recorded a 7.1 percent drop year-over-year in homes available for sale in the US
- Four out of the five most expensive markets are in California, and require a salary of over $100,000 for a mortgage
Single-family home prices keep on climbing
U.S. home prices continued to climb in the second quarter of 2017. The growth we’ve been seeing is, according to the National Association of Realtors, due to an imbalance between supply and demand on the market. Nationwide, the median sale price for existing single-family homes in Q2 was $255,600, 6.2 percent higher year-over-year. The median sale price increased in 87 of the markets measured by NAR last quarter. The second quarter of 2017 even surpassed the peak of Q3 2016, when the median sale price for single-family homes was $241,300.
The association’s latest report predicts that median prices will continue to rise if demand is high and supply stays low. One reason why supply is at such measly levels might be that Baby Boomers are not planning on downsizing for retirement.
In a time when Millennials get criticized for not being eager to buy, the Baby Boomer generation might be influencing their decision. CNBC suggests that it’s not Millennials who are at fault for the crawling housing market, but rather Baby Boomers, who continue to live in large suburban homes, rather than downsizing—even if they don’t necessarily need the extra space. Eventually, younger home buyers looking for that extra space won’t be able to find it, if the older generations remain reluctant to move.
The influx of new starter homes developing at a slow pace is another reason for the shortage of affordable single-family homes. Both local government and policy officials must address the affordability crisis, according to Lawrence Yun, NAR chief economist. “Listings typically flew off the market in under a month — and even quicker in the affordable price range — in several parts of the country. With new supply not even coming close to keeping pace, price appreciation remained swift in most markets,” said Yun.
Higher income needed in order to qualify for a mortgage
Supply is falling short, dropping 7.1 percent year-over-year, with only 1.96 million homes available for sale in Q2. The rise in the national median income was not enough to balance the market—with high mortgage rates and rising home prices, the first half of 2017 was witness to a competitive market.
In a study done by Business Insider, based on NAR’s data on housing affordability, we can browse through a list of U.S. metros where the minimum salary required to buy a home is highest. Four out of the five most expensive markets are in California, and require a salary of over $100,000 to qualify for a mortgage.
NAR compiled the data assuming a mortgage rate of 3.9 percent for all the areas included, with the monthly principle and interest payment limited to 25 percent of income. The markets are based on metropolitan statistical areas, with the exception of Anaheim-Santa Ana-Irvine and Los Angeles-Long Beach-Glendale, which are metropolitan divisions.
Below you can check how much you need to earn to afford buying a home in the top 5 most expensive U.S. markets:
|#||Metro||Market||Median Home Price||Salary Needed|
|1||San Jose-Sunnyvale-Santa Clara||California||$1,183,000||$219,000|
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Read the full list on Business Insider.