Realtor.com revealed in a new study that half of today’s home buyers are looking for a property under $288,000, which is more than 9% below the median price for homes currently on the market.
The results of the study found that home’s priced below $288,000 is 9.1%, or $27,000 under the national average.
“The price differences between what buyers are searching for, closing on, and what’s available on the market demonstrates just how big the gap is for entry-level home buyers,” said Danielle Hale, Chief Economist for realtor.com.
Realtor.com states that closing that gap won’t come easy, and estimates that approximately that 94,000 homes priced between $100,000 and $340,000 would need to be put up for sale achieve that balance. That would represent a near 15% increase in the number of listings in this price range. Homes price above $750,000 is currently were inventory is growing the most, even though there is only 11% more homes for sale in that price tier.
According to the study, the largest gap between what buyers want and what’s available is in Cincinnati, Ohio, where the median list price of $275,045 is 22% higher than the average closing price of $215,000. Realtor.com used the closing price to gauge what buyers are looking for. Houston had the second largest discrepancy, followed by Minneapolis, Minnesota, and Indianapolis, Indiana.
April’s data from the National Association of Realtors found that the median sales price of homes two months ago ($267,000) was 15% lower than homes that were available.
Hale added that this reported gap can explain why the rate of home sales is down 4% from 2018. Hale also that said low inventory of entry-level homes has caused their prices to rise 3.5-times faster than mid-to-large-sized homes.
“Entry-level homes continue to be difficult to come by as the inventory composition shifts more and more toward higher priced homes,” Hale said. “This is causing smaller and more affordable homes to appreciate rapidly, resulting in a mismatch between what buyers are able to spend and what sellers expect to receive.”