It’s no secret that inventory is tight. Demand is also high. But that doesn’t mean people are buying.
The underlying reason, according to Trulia’s MarketMatch report, is that properties are too expensive. In fact, the higher the general market value of a given metro, the more buyers are looking at disproportionally low-priced properties. This is particularly true in Florida, North Carolina, and Texas.
According to MarketMatch, 10.4 percent (nationally) of searches at a certain price point failed to match the available inventory at that price point. A year ago, the percentage was 8.3. More than 53 percent of all properties viewed nationally were priced below the median list price compared with 51 percent last year.
In many markets home seekers are disproportionately looking at homes priced much lower than available inventory. This, Trulia reports, has not only stalled demand, but supply, as more sellers are getting fewer bids. At the same time, at the other end of the spectrum, buyers in more distressed markets such as Camden or Toledo are searching for houses disproportionally higher than the lower end of the scale.
“These sorts of mismatches in the market can drive up prices in certain popular price ranges or cause properties to sit on the market longer than they otherwise would,” said Felipe Chacón, housing data analyst for Trulia's Housing Economics Research Team. “[M]any metros are tight on starter homes at the moment and heavy on higher-end homes. This puts upward pressure on starter home prices, especially in metros where people seem most interested in lower price ranges.”
Houston and Dallas have the highest and second highest market mismatch scores of 31.2 and 30.3 percent, respectively, Trulia reported. Job deceleration played a key role in Houston, where year-over-year job growth went from 3.6 percent in early 2015 to 0.6 currently. This is partially due to plummeting oil prices. In Dallas, however, job growth accelerated from early 2015 to today, yet the mismatch is large and growing when compared with the same period in 2015.
Unlike Houston which was fairly flat, the median listing price and price per square foot in Dallas climbed 11.8 percent and 10.4 percent year over year in August, while search interest remained relatively unchanged, further driving a wedge between interest and listings, Trulia reported.
Detroit, Philadelphia, and Dayton led cities where searches were for less than the median listing price (38, 42, and 45 percent, respectively).
Honolulu, New Orleans, and Albuquerque had the lowest market mismatch scores, all 7 percent or less. Miami saw the largest increase in market mismatch, from 8.6 percent in 2015 to 21.2 during the same period this year. Colorado Springs, on the other hand saw the largest decrease market mismatch going from 28.6 percent in 2015 to 16 percent.